The data center industry is experiencing unprecedented growth, driven by advancements in generative AI and initiatives like "East Data, West Computing." VNET (VNET, Financial) has overcome historical challenges and is now seeking new growth opportunities. Since late 2023, the company has significantly improved its profitability, surpassing market expectations in its Q3 2024 financial report, prompting institutional investors to reassess its value.
Several brokerages, including Jefferies, have raised VNET's target price, highlighting substantial growth potential. VNET's strong financial performance is attributed to improvements in its wholesale business, fueled by rising demand for AI-driven data centers (AIDC). The company's revenue growth outpaces capacity expansion, reflecting optimized pricing and strong downstream demand.
VNET plans to invest heavily, with capital expenditures reaching 55 billion RMB in 2024, indicating confidence in market demand. The company has diversified its financing strategies, including strategic partnerships and Pre-REITs, to support expansion and maintain competitiveness. Analysts highlight VNET's undervaluation compared to peers, suggesting significant investment potential.
