GDS Raises FY26 Booking Target to 1GW, with AI Demand Supporting Growth Outlook

Overview

JPMorgan notes that GDS significantly raised its 2026 booking target, driven by demand from its top three hyperscale customers and emerging AI customers. Management believes booking momentum, reservation conversion, and backlog growth will provide strong visibility into move-ins, revenue, and EBITDA expansion over the coming years, with the strong outlook continuing through at least 2028.

Core views

The key theme is accelerated capacity bookings driven by AI-related demand: the top three customers contributed 77% of 1H26 bookings, the company has secured 600MW of year-to-date reservations, and reservation exercise rates over the past 1 to 1.5 years have been 100%. Against a backdrop of ramping domestic GPU supply and healthy new CPU orders, 2027 move-ins are expected to more than double versus 2026, with further growth in 2028. Meanwhile, pricing adjustments in legacy contracts will keep MSR under pressure, and a higher share of pass-through power revenue will mechanically compress EBITDA margin.

Analysis framework

The report assesses medium-term growth visibility and earnings implications based on management guidance, booking and reservation volumes, backlog, move-in schedules, revenue mix, and margin indicators.

Methodology notes

• Operating AnalysisBookings–Backlog–Move-in Conversion Analysis

  Assesses the pace of future revenue recognition and capacity deployment through changes in bookings, reservations, backlog, and move-ins.

  Reservation volumes and historical exercise rates improve visibility into order conversion; backlog expansion and expected move-ins in 2027–2028 form the basis for the medium-term growth assessment.

• Profitability AnalysisRevenue Mix and Margin Analysis

  Analyzes the impact of changes in the shares of MSR and pass-through power revenue in total revenue on margins.

  Although power costs can be passed through to customers, they do not generate profit. Weaker MSR increases the share of power revenue, thereby mechanically compressing EBITDA margin.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• GDS.US

  A data center operator directly benefiting from expanding hyperscale customer and AI computing demand

  Strengths

  FY26 booking target increased to 1GW; reservations, backlog, and historical exercise rates improve order-conversion visibility; move-ins are expected to grow significantly in 2027–2028.

  Weaknesses

  MSR is expected to continue declining over the next 18 months; a rising share of non-profitable pass-through power revenue compresses EBITDA margin.

  Comparison

  The report does not provide peer comparisons.

  Risks

  High customer concentration, domestic GPU supply ramping below expectations, reservation conversion below expectations, capital expenditure execution and financing pressure, and pricing adjustments lasting longer than expected.

Key data

• FY26 Booking Target1GWRaised from the previous 500MW guidance.
• Top Three Customers' Share of 1H26 Bookings77%Demand is concentrated among three major hyperscale customers.
• Year-to-Date Reservations600MWManagement expects new reservations to reach more than 1GW.
• 1H26 Backlog757MWExpected to exceed 1GW by the end of 2026.
• Annualized EBITDA per MWApproximately RMB2.2 millionBased on management's figures.
• 2026 Capital Expenditure GuidanceRMB10 billionPreviously RMB9 billion.
• 2026 Revenue Growth GuidanceAbove 12%Previously, the midpoint was approximately 11%.
• 2026 EBITDA Growth GuidanceAbove 11%Previously, the midpoint was approximately 9%.
• 2Q26 EBITDA Margin45.5%Down 1.8 percentage points year over year and 3.2 percentage points quarter over quarter.
• 2Q26 MSR Year-over-Year Growth-6%Management expects the MSR downtrend to continue for approximately another 18 months.

Impact & implications

The doubling of the booking target and increases in reservations and backlog reinforce GDS's medium-term growth outlook during the AI computing infrastructure demand cycle and support higher revenue and EBITDA guidance. Higher capital expenditures indicate that the company will accelerate its ability to capture demand, but also raise requirements for execution, financing, and return realization; near-term margins may remain pressured by declining MSR and a higher share of power revenue.

Risks

• The top three hyperscale customers accounted for 77% of 1H26 bookings, indicating high customer concentration.
• MSR is declining due to pricing adjustments in legacy contracts and may persist longer than management expects.
• There is uncertainty around domestic GPU supply ramp-up, improved chip availability, and realization of AI demand.
• Although reservation orders have had high historical exercise rates, future conversion rates may still decline.
• Capital expenditure guidance was raised to RMB10 billion, potentially increasing funding, construction-schedule, and investment-return risks.
• A higher share of power revenue may continue to depress EBITDA margin.

What to watch

• Whether FY26 bookings can reach 1GW and whether new reservations can exceed 1GW.
• The pace at which the 757MW backlog converts into actual move-ins and recognized revenue.
• Whether move-ins in 2027, particularly in 2H27, more than double versus 2026.
• Whether move-in and EBITDA growth further accelerate in 2028.
• The year-over-year decline in MSR, progress in repricing legacy contracts, and sustainability of the 10%–11% gross margin yield.
• Improvements in domestic GPU supply and changes in the demand mix between CPU and GPU capacity.
• Capital expenditure execution, project delivery, and balance-sheet capacity.