GDS Holdings Ltd (GDS) shares surged 7.49% during intraday trading on Tuesday, fueled by optimism surrounding the company's growth prospects in China's booming artificial intelligence (AI) and data center market.
The stock rally was driven by reports that GDS is considering an initial public offering (IPO) in the US for its GDS International business, which operates data centers in Hong Kong and Southeast Asia. According to Bloomberg, GDS is in talks with banks to potentially raise around $500 million through the IPO, which could happen as early as this year.
Additionally, investment bank TD Cowen upgraded GDS and raised its price target to $39 from $27, maintaining a Buy rating. TD Cowen cited GDS's strong Q3 results and expectations of a Q4 beat, highlighting the company's growth potential in China's booming AI and data center sector. The bank noted that GDS achieved a record 25,600 square meters of data center space installed for Tier 1 companies in Q3, fueled by robust AI demand. TD Cowen expressed confidence in GDS meeting its 2024 target of 60,000 square meters of net installations with 431 MW of total bookings.