GDS Stock Jumps 13% in a Month: Here's What You Should Know

GDS Holdings Limited GDS stock has jumped 13.3% in a month compared with the industry’s 4.3% uptick and the Zacks S&P 500 Composite's 5.4% rise.

1-Month Share Price Performance

                                                                 Image Source: Zacks Investment Research

Let us delve deeper into the factors that have contributed to the company’s outperformance.

Bookings Led by AI Demand

The expanding demand for data center capacity in China, notably from rising AI workloads, is benefiting GDS. During the second quarter of 2026, the total area committed and pre-committed improved by 18.2% year over year and 8.2% sequentially. Management is betting on soaring AI demand, anticipating 2026 sales commitments to reach a record level exceeding the original target. This solid booking momentum provides greater visibility into future revenues as contracted capacity moves into utilization.

It highlights the company’s ability to capture growing infrastructure demand associated with AI deployment in China, which is expected to bolster investor confidence in the company’s long-term growth trajectory.

Higher Utilization Drives Top Line

GDS is continuously ramping up across its existing data centers, as evidenced by a year-over-year increase in area utilization by 13.2% during the second quarter of 2026. It exceeded the 10.8% year-over-year rise in area in service. The utilization rate expanded to 79.2% from the preceding quarter’s 77.3%.

Second-quarter 2026 revenues moved up 6.5% year over year on the back of continued data center ramp-up. Therefore, we expect the continued conversion of backlog into utilized capacity to provide a cushion to the top line as projects ramp up.

Expansion Pipeline Strengthens Future Capacity

GDS’s area under construction jumped 43.9% sequentially and 28.8% year over year at the end of June 2026. Most notably, 89.2% of this capacity was pre-committed, up at a lofty pace from the earlier 74.7%. The high pre-commitment level lowers the speculative nature of the company’s expansion. Moreover, it provides high visibility into future move-ins. Meanwhile, the company’s data center commitment rate in service is 92.4%.

Zacks Rank & Other Stocks to Consider

GDS currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Business Services sector are ScanSource SCSC and Gartner IT, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ScanSource has a long-term earnings growth expectation of 15%. SCSC delivered a trailing four-quarter earnings surprise of 7.8%, on average.

Gartner has a long-term earnings growth expectation of 20.1%. IT delivered a trailing four-quarter earnings surprise of 13.5%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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