We recently compiled a list of the 10 AI News and Ratings Making Waves on Wall Street. In this article, we are going to take a look at where GDS Holdings Limited (NASDAQ:GDS) stands against the other AI stocks.

US Energy Shortage Threatens AI Advancements

CNBC reported that the U.S. is facing a power capacity shortage as it races with China to lead in artificial intelligence, according to Caroline Golin, Google’s global head of energy market development. Speaking at a Nuclear Energy Institute conference, Golin highlighted the growing need for reliable energy to support AI advancements, with renewables causing grid instability and prompting the company to turn to nuclear power.

Last October, it partnered with Kairos Power to purchase 500 megawatts from small modular nuclear reactors, with the first reactor expected in 2030. Other Big Techs have also shown interest in nuclear energy, investing in projects to meet rising power demands. While nuclear is seen as a long-term solution, Golin emphasized the immediate need for more power to compete with China. President Trump declared a national energy emergency to fast-track power plant construction for AI data centers.

Stargate Project Aims to Strengthen US AI Leadership

While the energy needs look like a significant hurdle, the latest Stargate project is aiming to solve that problem. Reuters reported on February 6 that OpenAI announced it is assessing U.S. states for AI data center locations under the $500 billion Stargate project, aimed at strengthening the U.S. position in the global AI race against China. Chris Lehane, OpenAI’s chief global affairs officer, stressed the competition’s high stakes and noted that it could shape the future of democratic versus authoritarian AI. He commented:

"As news emerged about DeepSeek, it makes it clear this is a very real competition and the stakes could not be bigger… Whoever ends up prevailing in this competition is going to really shape what the world looks like going forward, whether we have democratic AI that's free and open, or authoritarian AI that is autocratic."

The initial Stargate data center is under construction in Abilene, Texas, with the potential for 5-10 campuses overall. However, China’s DeepSeek recently demonstrated that advanced AI models could be developed on less specialized, cheaper chips, challenging the assumption that large, costly data centers are necessary for AI progress, the report stated.

For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A top level executive looking out of a skyscraper window, symbolizing the strategic decisions taken by the company.

GDS Holdings Limited (NASDAQ:GDS)

Number of Hedge Fund Holders: 32

GDS Holdings Limited (NASDAQ:GDS) operates data centers in China, offering colocation, managed hosting, cloud services, and consulting to cloud providers, internet firms, financial institutions, and more.

On February 12, Morgan Stanley analyst Yang Liu reaffirmed an Overweight rating and a $39 price target on GDS Holdings Limited (NASDAQ:GDS), and highlighted it as a catalyst-driven idea ahead of Alibaba’s FY3Q25 earnings on February 20. The report is expected to provide insights into Alibaba’s future CapEX and cloud revenue outlook, which are important for GDS’s growth since Alibaba is its largest customer in China. Three potential scenarios were outlined: if Alibaba maintains FY26 capex at around RMB 70 billion (US$1 = RMB 0.14) or provides no CapEX update, GDS’s stock impact is expected to be neutral.

A more than 10% capex increase driven by AI investments, coupled with a bullish cloud revenue outlook, could lead to more new bookings and faster move-ins for GDS, potentially driving a 10% increase in share price. On the other hand, a CapEX reduction could slow GDS’s move-ins and result in a 10% stock price decline. Additionally, any AI investment increases, especially after Alibaba’s partnerships with Apple, Qwen model releases, and ByteDance’s investment plans, could further drive demand across the data center industry.

Overall GDS ranks 6th on our list of the AI stocks that are making waves on Wall Street. While we acknowledge the potential of GDS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GDS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.