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On Monday, Nomura/Instinet initiated coverage on GDS Holdings shares, traded on (NASDAQ:GDS), with a Buy rating and a price target of $35.80. The stock, currently trading at $27.61, has shown remarkable momentum with a 20% surge in the past week alone. According to InvestingPro data, the company has delivered an impressive 221% return over the past year. The move comes as GDS Holdings pivots its focus towards domestic operations following the spin-off of its subsidiary, DayOne. Analysts at Nomura/Instinet highlighted the company’s potential to capitalize on the rapidly growing artificial intelligence (AI) inferencing market, bolstered by the success of its DeepSeek program.
Nomura/Instinet’s analysts pointed to GDS’s leading position in China’s third-party data center sector as a significant advantage. They expect the company to benefit from increased AI infrastructure investments by major Chinese internet firms. InvestingPro analysis confirms GDS’s strong market position, with the company maintaining a "GOOD" overall financial health score despite operating with significant debt levels. Despite current challenges such as restricted access to certain semiconductor chips, Nomura/Instinet sees GDS’s conservative approach to order-taking and the anticipated rise in domestic AI chip usage as mitigating factors for any potential risk to the company’s order backlog.
The research firm has projected that GDS will sign new contracts totaling 85,000 square meters in the fiscal year 2025, which would mark a substantial 72% increase from the 49,000 square meters contracted in 2024. This forecast includes a notable 152-megawatt order that GDS secured in the first quarter of 2025.
Nomura/Instinet’s positive outlook on GDS Holdings reflects confidence in the company’s strategic direction and its ability to navigate the evolving technological landscape within China. The new price target of $35.80 aligns with the broader analyst consensus, as InvestingPro data shows analyst targets ranging from $29.00 to $63.08. With 8 additional exclusive ProTips and comprehensive analysis available, investors can access the full GDS Holdings Pro Research Report to make more informed investment decisions.
In other recent news, GDS Holdings reported its fourth-quarter earnings for fiscal year 2024, showcasing a significant 152MW deal with a top cloud hyperscaler in China. Despite this, the results did not meet expectations, with TD Cowen cutting the price target to $38, though maintaining a Buy rating. Meanwhile, Raymond (NSE:RYMD) James upgraded GDS Holdings to Strong Buy, setting a higher price target of $53, citing strategic expansion beyond mainland China as a positive move for long-term growth. JMP Securities also increased its price target to $40, maintaining a Market Outperform rating and highlighting the company’s progress toward a real estate investment trust (REIT) and potential IPO for its international business. Jefferies followed suit by upgrading the stock to Buy with a new target of $45, noting the company’s focus on de-leveraging and alternative fundraising strategies. JPMorgan raised its price target to $34 but kept a Neutral rating, pointing out ongoing pricing pressures and overcapacity issues that may resolve in the coming months. GDS Holdings is advancing its refinancing activities, including a C-REIT listing, to reduce its net debt. The company’s international arm, DayOne, is expected to maintain momentum, despite new AI diffusion laws, with potential for an IPO within 18 months.
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