GDS Holdings Ltd (GDS) saw its stock surge 6.50% on HK market trading on Wednesday, outperforming the broader market. The rally in the Chinese data center operator's shares came amid growing optimism surrounding the prospects of artificial intelligence (AI) adoption in China and its potential impact on data center demand.

The upbeat sentiment was fueled by recent developments, including a meeting between Chinese President Xi Jinping and prominent tech leaders, signaling a more supportive stance towards the private sector. Additionally, the emergence of the AI chatbot DeepSeek has sparked interest in Chinese tech firms investing in AI technologies.

Notably, analysts at Citigroup recently upgraded GDS Holdings and raised their price target, citing expectations of increasing AI data center-related spending from major Chinese cloud service providers. The brokerage firm believes that the AI capital expenditure up-cycle is in its early stages, and GDS Holdings is well-positioned to benefit as a leading data center operator serving domestic tech giants.