image credit: Bamboo Works
Key Takeaways:
Once a data center laggard, VNET has advanced its reinvention as an AI-focused wholesale data center operator through a major new partnership with CATL
VNET founder Chen Sheng remains firmly in control of his company, as CATL's nearly $1 billion investment signals its move beyond batteries into AI-ready energy infrastructure
When Chen Sheng, who also goes by Josh, founded VNET Group Inc. (NASDAQ:VNET) in 1996, China had yet to build its first independent, privately owned data center. Three decades later, including a spotty track record filled with ups-and-downs, VNET thinks it has finally found a formula for success by leaning into an AI boom that has made data center capacity a key asset in the U.S.-China technology race.
That new reality was on display last week, when a consortium linked to leading battery maker Contemporary Amperex Technology Ltd. (CATL)(300750.SZ; 3750.HK) agreed to buy about 38% of VNET's shares for nearly $1 billion. VNET's shares surged roughly 25% on the announcement, reflecting not only a big vote of confidence in its prospects, but also CATL's belief that the stock was highly undervalued at the time.
From pioneer to AI contender
VNET built its early franchise by offering hosting services outside China's big three state-run telecoms carriers that dominated the data center business at that time. Today it runs more than 50 data centers across over 30 Chinese cities, with 889 MW of wholesale capacity and more than 49,000 retail cabinets. Its customers include internet and cloud service giants like ByteDance, Alibaba and Tencent, whose AI ambitions are driving their demand for data center capacity.
But before the recent AI boom, VNET spent much of the past decade falling behind its faster-growing and savvier rivals. Heavy debt, governance concerns and repeated failed privatization efforts battered investor confidence in the company, leaving its stock undervalued compared with domestic peers GDS (NASDAQ:GDS) (9698.HK) and Chindata.
VNET's comeback rests on a pivot to wholesale facilities custom designed for AI workloads. In 2025, it delivered a record 404 MW of new capacity, taking its wholesale capacity in service to 889 MW, with another ...
