Key Takeaways:
Data center operator GDS reported its third-quarter revenue rose 10.2% to 2.89 billion yuan
The company generated 1.37 billion yuan from transferring some of its assets into a REIT, contributing to its net profit of 729 million yuan for the quarter
For China's data center industry, 2025 may go down as a watershed year. On one front, demand for AI training and inference has ignited a new infrastructure building cycle, creating new demand for high performance computing often housed in professionally operated data centers. Simultaneously, the listing of China's first batch of infrastructure-oriented real estate investment trusts (REITs) for data centers is introducing a new fundraising instrument for this traditionally capital-intensive, highly leveraged sector.
That dynamic is embodied in GDS Holdings Ltd. (NASDAQ:GDS) (9698.HK), which is investing heavily in infrastructure on expectation of growing AI demand from major tech firms, even as it grapples with the financial strain of building and operating billions of dollars worth of data centers.
GDS' latest earnings report, released last week, shows the company's third-quarter revenue rose 10.2% year-on-year to 2.89 billion yuan ($406 million), marking a second consecutive quarter of double-digit growth. The company secured new commitments for 75,000 square meters of capacity in the first nine months of this year, equivalent to roughly 240 MW. Full-year commitments are projected to approach 300 MW, with approximately 65% tied to demand for customers running AI-powered applications.
New order momentum slows
While AI demand is clearly fueling fresh demand for high-powered, offsite computing, the pace isn't exactly happening at lighting speed. Management acknowledged on GDS' earnings call that new order intake slowed after the second quarter, suggesting that revenue growth next year may not match this year's pace. Furthermore, contract renewals continue to ...
