GDS shares surge 12% on upbeat outlook despite Q2 miss

Shares of GDS Holdings Ltd. surged 12% in pre-market trading on Wednesday after the company raised its full-year outlook despite missing second-quarter revenue and EBITDA targets.

The Shanghai-based data center operator reported Q2 revenue of $537.8 million, below the $550 million consensus estimate, while adjusted EBITDA came in at $278.6 million, also trailing forecasts. The company attributed the shortfall to slower-than-anticipated demand in certain markets and project delays.

GDS maintained its full-year revenue guidance at $2.2 billion to $2.3 billion but narrowed its adjusted EBITDA forecast to $1.15 billion to $1.2 billion, up from prior expectations of $1.1 billion to $1.2 billion. The company cited stronger-than-expected demand for hyperscale and enterprise cloud services as the primary driver behind the upward revision.

Chief Executive Officer Daniel Newman noted that while near-term challenges persist in some regions, the long-term outlook remains robust due to sustained digital transformation trends. The company also reaffirmed its commitment to expanding capacity in key markets, including China, Southeast Asia, and Europe.

Analysts at Morgan Stanley maintained an overweight rating on GDS, citing the improved outlook as a key positive despite the Q2 underperformance. The stock’s pre-market surge follows a broader rally in Chinese tech shares amid signs of policy stabilization.

GDS has raised approximately $1.5 billion in equity and debt financing over the past 12 months to fund expansion, including a $400 million convertible bond offering in March. The company’s shares have gained 35% year-to-date, outperforming the broader tech sector in Asia.