2026 Booking Target Raised to 1GW, With AI Demand Supporting GDS's Growth Visibility Through at Least 2028

Overview

Based on discussions with management, JPMorgan noted that GDS's booking momentum has strengthened significantly, driven primarily by demand from three hyperscale customers and partnerships with emerging AI customers. The company raised its 2026 booking target from 500MW to 1GW and increased its capital expenditure, revenue growth, and EBITDA growth guidance. Management believes strong demand can continue through at least 2028.

Core views

Growth in reservations and backlog improves visibility into conversion over the coming years; occupancy is expected to more than double in 2027 and rise further in 2028, potentially driving significant EBITDA growth. AI demand is supporting capacity expansion, but repricing of existing contracts will keep monthly service revenue declining over the next 18 months, while a higher power-revenue mix will mechanically compress EBITDA margins.

Analysis framework

The report primarily uses management guidance and operating metrics—including bookings and reservation progress, backlog, occupancy ramp, revenue mix, and EBITDA per unit of capacity—to assess medium-term growth and margin trends.

Methodology notes

• Operating Metrics AnalysisBookings-Reservations-Occupancy Conversion Framework

  Assesses visibility into future revenue and capacity realization through bookings, reservations, backlog, and subsequent occupancy.

  The company has secured 600MW of reservations year to date, expects new reservations for the full year to exceed 1GW, and has achieved a 100% exercise rate over the past 1 to 1.5 years, providing high visibility into future order conversion.

• Unit Economics ModelEBITDA per MW Calculation

  Evaluates the potential earnings contribution of incremental backlog using annualized EBITDA per MW.

  Management stated that each MW can generate approximately RMB2.2 million in annualized EBITDA, implying that backlog growth increases the potential for future EBITDA expansion.

• Margin AnalysisRevenue Mix and EBITDA Margin Analysis

  Analyzes the effects of changes in the share of zero-margin power resale revenue and service revenue trends on margins.

  Although power costs can be passed through to customers, they generate no profit; declining monthly service revenue raises the share of power revenue, mechanically compressing EBITDA margins.

Asset mapping & comparison

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

• GDS.US

  Direct underlying

  Strengths

  Strong demand from hyperscale customers; AI customers are contributing incremental demand; growth in reservations, backlog, and occupancy improves medium-term growth visibility.

  Weaknesses

  Monthly service revenue remains on a downward trajectory; a higher power-revenue mix reduces EBITDA margins; business growth depends on demand from large customers.

  Comparison

  The report does not provide peer comparisons.

  Risks

  Customer concentration, reservations failing to convert as expected, domestic GPU supply ramping more slowly than expected, continued repricing of existing contracts, and execution risks related to high capital expenditure.

Key data

• 2026 booking target1GWRaised from the previous 500MW.
• Bookings contribution from top three customers77%As a share of bookings in 1H26.
• Reservations secured year to date600MWThe company expects new reservations for the full year to exceed 1GW.
• 1H26 backlog757MWManagement expects it to exceed 1GW by year-end 2026.
• Annualized EBITDA per MWapproximately RMB2.2 millionAccording to management.
• 2026 capital expenditure guidanceRMB10 billionRaised from RMB9 billion.
• 2026 revenue growth guidanceabove 12%The previous midpoint was approximately 11%.
• 2026 EBITDA growth guidanceabove 11%The previous midpoint was approximately 9%.
• 2Q26 EBITDA margin45.5%Down 1.8 percentage points year over year and 3.2 percentage points quarter over quarter.
• Monthly service revenueDown 6% year over year in 2Q26Expected to remain down approximately 3% year over year in 4Q26 and 2027, with the downward trend potentially lasting 18 months.

Impact & implications

The higher booking target, increased reservations, and expanding backlog reinforce expectations for capacity conversion and EBITDA growth in 2027-2028. Higher capital expenditure indicates that the company is increasing supply construction to meet demand, but investors must still weigh growth delivery against repricing of existing contracts and margin pressure.

Risks

• The top three hyperscale customers accounted for 77% of bookings in 1H26, indicating high customer concentration.
• Monthly service revenue is expected to continue declining over the next 18 months, which may constrain improvement in pricing.
• A higher share of power revenue will compress EBITDA margins on an accounting basis.
• 2026 capital expenditure was raised to RMB10 billion, requiring attention to construction progress, financing, and return realization.
• If AI demand, domestic GPU supply, or new customer orders fall short of expectations, bookings and occupancy conversion could be affected.

What to watch

• Whether full-year new reservations can exceed 1GW and whether the reservation exercise rate remains high.
• Whether backlog can exceed 1GW by year-end 2026.
• Whether occupancy in 2027 more than doubles versus 2026, especially progress in 2H27.
• Changes in the GPU and CPU workload mix and the ramp-up of domestic GPU supply.
• The pace of monthly service-revenue declines, repricing progress for existing contracts, and EBITDA margin trends.
• Capital expenditure execution and delivery against revenue and EBITDA growth guidance.