2Q26 China data center delivery pace slows, but the 12-month investment thesis remains unchanged

Overview

This report is Goldman Sachs' 2Q26 earnings preview for the China data center sector. The core view is that the industry's move-in pace in 1H26 was slower than previously expected, mainly due to tight supply of domestic and imported chips; however, the spread of Chinese open-source AI models, lower inference costs, catch-up in domestic hardware systems, and continued growth in training and inference demand still support medium- to long-term construction and utilization improvement in China's data center industry.

Core views

Goldman Sachs maintains a constructive view on China's data center sector. In the short term, China added 595 EFLOPS of intelligent computing power in 1H26, which Goldman estimates is equivalent to about 0.7GW of AI-related move-in, below the 2H25 level, so it revised 2026E China data center move-in demand to about 3GW. In the medium term, combined AI and non-AI demand is still expected to rise from 16GW in 2025 to 27GW in 2028E, implying about 20% CAGR for 2025-2028E. At the stock level, GDS and VNET continue to benefit from wholesale IDC expansion and order conversion, while Range Intelligent remains favored for its capacity reserves, AIDC capabilities, and GPUaaS exposure.

Analysis framework

The report evaluates the 12-month investment value of major names using industry computing power additions, order and move-in pace, company revenue and adjusted EBITDA forecasts, capacity rollout and utilization, MSR price trends, and EV/EBITDA and SOTP valuation frameworks.

Methodology notes

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  GDS's target price is based on separate valuations for GDS China and DayOne, with a 10% holding company discount applied to the corporate structure.

• Valuation methodsEV/EBITDA

  Enterprise value / EBITDA multiple

  VNET's target price is based on 12x 2027E EV/EBITDA; Range Intelligent's target price is based on discounted weighted target EV/EBITDA multiples across different business segments.

• Factor AnalysisGS Factor Profile

  Comparison of growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs uses standardized percentiles to compare stocks' growth, financial return, and valuation attributes relative to the market and industry peers, providing investment context.

Asset mapping & comparison

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

• GDS / 9698.HK

  Core beneficiary, rated Buy

  Strengths

  A leading player in China's third-party neutral data center market, with wholesale business scale, key computing cluster resources, and DayOne as an overseas growth option.

  Weaknesses

  2Q26 move-in pace is soft, with 2027E revenue and adjusted EBITDA forecasts cut by 2%; China MSR is expected to decline 7%-9% YoY in RMB/kW terms over 2026-2028E.

  Comparison

  Compared with VNET, GDS is more oriented toward wholesale and large-customer platform-type business, and gains overseas growth exposure through DayOne.

  Risks

  Move-in demand and utilization improvement below expectations, slower-than-expected ramp-up in overseas revenue and profitability, weaker-than-expected pricing trends in China and overseas, customer churn, and slower deleveraging progress.

• VNET

  Core beneficiary, rated Buy

  Strengths

  Transitioning from a traditional retail IDC operator to a fast-growing wholesale IDC operator, with rising wholesale IDC revenue and EBITDA contribution likely to drive valuation multiple re-rating.

  Weaknesses

  2Q26E revenue was cut due to slower move-in, while traditional cloud computing and value-added services growth remains weak.

  Comparison

  Compared with GDS, VNET's investment focus is more concentrated on the rising wholesale IDC mix, strategic partnerships, and delivery of new large orders.

  Risks

  Insufficient financing capability, weaker-than-expected order acquisition and execution, AI-related geopolitical risks, further decline in traditional business, and faster-than-expected shifts in AI model training demand due to technological change.

• Range Intelligent / 300442.SZ

  Goldman Sachs' preferred A-share data center operator, rated Buy

  Strengths

  Has abundant capacity reserves, full-stack AIDC capabilities, strong customer relationships, low-cost financing ability, and potential upside from GPUaaS and APAC overseas expansion.

  Weaknesses

  Growth depends on order wins, utilization ramp-up, and execution of large-scale capacity deployment.

  Comparison

  Ranks above Athub and Sinnet among the A-share data center operators covered by Goldman Sachs.

  Risks

  Orders below expectations in a competitive environment, slower-than-expected utilization ramp-up, greater-than-expected pricing pressure, weaker-than-expected overseas expansion execution, changes in chip availability, and financing difficulties.

• Sharetronic Data / 300857.SZ; Lettall Electronic / 603629.SS

  Uncovered A-share names related to GPUaaS/GPU leasing

  Strengths

  Have disclosed strong guidance performance in GPUaaS or GPU leasing-related businesses, benefiting from rising GPU spot rental prices.

  Weaknesses

  The report explicitly states these are uncovered names, lacking formal Goldman Sachs ratings, target prices, and full earnings forecasts.

  Comparison

  Unlike data center operators, these names are more directly exposed to fluctuations in GPU leasing spot prices.

  Risks

  Changes in GPU supply-demand, spot rental prices, chip regulation, and customer demand may cause earnings volatility.

Key data

• 2026E China data center move-in demandAbout 3GWGoldman Sachs' lowered estimate for combined AI and non-AI demand, broadly similar to 2025.
• 2025-2028E China data center demand CAGRAbout 20%Demand is expected to rise from 16GW in 2025 to 27GW in 2028E.
• 1H26 China newly added intelligent computing power595 EFLOPSMIIT data, below 802 EFLOPS in 2H25; Goldman Sachs estimates this is equivalent to about 0.7GW of AI-related move-in.
• GDS 2Q26E revenueRmb3.07bn, +6% YoY2% below Visible Alpha consensus; 2Q26E adjusted EBITDA is Rmb1.34bn, -2% YoY, 2% above consensus.
• GDS target priceUS$46 / HK$45Lowered from the previous US$49/HK$47, based on SOTP valuation.
• VNET 2Q26E revenueRmb2.77bn, +14% YoYCut by 3% due to slower move-in and expected to be the low point of the year; 2Q26E adjusted EBITDA is Rmb927mn, +26% YoY.
• VNET target priceUS$16Unchanged, based on 12x 2027E EV/EBITDA.
• Range Intelligent target priceRmb117Based on 18x 2030E EV/EBITDA and discounted back to end-2026 using a 10% cost of equity.

Impact & implications

In the short term, earnings and order delivery may experience timing volatility due to chip supply impacts, and the market is more focused on July-August order updates, details of VNET's strategic cooperation with CATL, overseas expansion progress, and large new orders. In the long term, improving AI model efficiency, iteration in domestic hardware, and increased outsourcing demand for third-party data centers should still support re-rating and earnings growth for leading data center operators.

Risks

• Chip supply remains tight, causing further delays in AI-related move-in and order delivery.
• Data center demand, utilization improvement, or order wins come in below expectations.
• Downward pricing pressure in China and overseas data centers is greater than expected, dragging on MSR and margins.
• Overseas expansion, DayOne ramp-up, or strategic partnership execution is slower than expected.
• Deterioration in financing conditions affects capacity expansion and GPUaaS investment.
• The structure of AI model training and inference demand changes more than expected due to technological iteration.
• Geopolitical or regulatory changes affect the supply of advanced chips and domestic chips.

What to watch

• GDS order updates disclosed in July-August, especially whether the potential 500MW order volume in 1H26 materializes.
• Details on CATL strategic cooperation, overseas expansion, and new large orders from VNET's earnings call.
• Whether newly added intelligent computing power in China re-accelerates in 2H26.
• Delivery progress of domestic hardware such as Huawei Atlas 950 SuperPoD and Alibaba T-head Lingjun Zhenwu M890 SuperPoD.
• Whether the gap between GPUaaS/GPU leasing spot prices and long-term contract prices continues to widen.
• GDS China MSR renewal pressure and the delivery of DayOne revenue and EBITDA growth.