GDS Shares Slide as Record Bookings Fail to Offset Delayed Revenue Outlook

Shares in GDS Holdings fell 13.2 percent in Hong Kong after China’s largest data centre operator reported normalised first-quarter revenue growth of 7.9 percent and left full-year guidance unchanged, even as the company disclosed record new orders driven by artificial intelligence demand. 

In earnings released on Wednesday, GDS reported a 23.6 percent year on year increase in net revenue to RMB3,367.1 million ($488.1 million), with that headline figure boosted by a one-time gain from the partial sale of its stake in its Singapore-headquartered DayOne unit. Minus the support from the DayOne sale, net revenue grew 7.9 percent to RMB 2.9 billion.

Chairman and chief executive William Huang said GDS recorded around 200 megawatts of new bookings in January to March period — the company’s highest ever for a single quarter. “We started 2026 with very strong sales,” Huang said. “With AI infrastructure demand intensifying, we believe GDS is uniquely positioned to capture the next phase of growth.”

However, revenue from its increased bookings remains distant, with the company’s chief financial officer cautioning that GDS does not expect those new deals to translate into active tenancies until the second half of 2027.

Shares Drop

GDS’s Hong Kong-listed shares closed at HK$34.32 on 21 May, the session after the results, and fell a further 2.5 percent to HK$33.48 on 22 May. The two-day decline of 15.4 percent left the stock trading at HK$13.46 below its 52-week high of HK$46.94, reached on 24 April.

In an earnings call last week, the Shanghai-based company reported 346 megawatts of gross new power commitments year to date — more than in any full year from 2022 through 2024 — against a full-year 2026 target of at least 500 megawatts.

Newman said move-in would be lower in the April through June period than the 16,086 square metres recorded in the first three months of the year, before recovering to around 20,000 square metres per quarter in the second half of 2026.

The company kept its full-year revenue guidance of RMB 12.4 billion to RMB 12.9 billion unchanged.

800MW Annually to Serve AI

“Over the past few quarters, we have seen a resurgence in data center demand driven by AI,” Huang told analysts in the earnings call. He added that, “Customers are planning their future deployments at unprecedented scale with a high degree of conviction.”

The China data centre pioneer said in the call that GDS plans to invest RMB 30 billion to RMB 50 billion ($4.3 billion to $7.2 billion) in the next three years to meet that demand.

“Up to the end of 1Q26, our total bookings stood at 1.8 gigawatts,” Huang said. “In our three-year business plan, we target adding 500 megawatts to 800 megawatts of new bookings every year with the potential to do more.”

Newman said GDS plans to finance the programme with roughly 60 percent project debt, leaving approximately RMB 14 billion of equity funding to be drawn from operating cash flow, asset monetisation proceeds and the company’s cash balance.

That cash balance stood at RMB14.8 billion ($2.1 billion) at the end of March, bolstered by the $385 million DayOne share sale and a $300 million convertible preferred share placement with Chinese institutional investor Huatai Capital Investment.

The company predicts capital expenditures for the full year of 2026 of around RMB 9 billion, more than double the RMB 4.7 billion it spent in 2025. Operating cash flow of RMB 447.7 million in the first quarter left the core business running a free cash flow deficit before asset transaction proceeds.

Huang said GDS’ 2026 forecast contains no assumption of imported chips, with all growth based on domestic supply chains. Any resumption of chip imports from restricted suppliers would represent upside, he said.