VNET: AI Power Capacity And China Data Center Buildout Will Drive Upside

Analysts have trimmed their fair value estimate for VNET Group by about $1.59 per share, while still highlighting stronger projected revenue growth, higher profit margins, and a lower assumed future P/E multiple as they recalibrate price targets in light of recent research updates from Deutsche Bank, Jefferies, and Morgan Stanley.

Analyst Commentary

Recent commentary on VNET Group centers on how the company is positioned within China's carrier neutral data center market, with bullish analysts pointing to bookings, development capacity, and exposure to artificial intelligence related demand as key factors supporting their valuation work.

Several research updates reference elements such as revenue, EBITDA, utilization and access to power resources when explaining price targets, which gives you a clearer line of sight into how the Street is thinking about execution and growth potential for VNET Group.

Bullish Takeaways

• Bullish analysts highlight VNET Group's role as a leading carrier neutral data center operator in China, which they describe as supportive of long term revenue growth and margin improvement assumptions used in their valuation models.
• Some bullish price targets are tied to expectations that "strong" bookings, a deep development pipeline and rising utilization can support higher EBITDA and justify premium valuation multiples relative to current trading levels.
• One research update raises a price target into the mid US$20s after Q1 revenue and EBITDA came in above consensus, with the analyst citing new order contracts and ongoing strong demand as reasons for their growth expectations for 2027 to 2028.
• Another major global bank elevates VNET Group to a top pick and maintains a double digit price target, arguing that shareholder issues are largely resolved and that large, 500 megawatt memorandums of understanding, together with substantial power resources in Ulanqab, increase visibility on potential AI related demand and future capacity deployment.

What’s in the News for VNET Group

• China is preparing a reported US$295b nationwide data center buildout, according to Bloomberg, with VNET Group mentioned alongside other Chinese cloud and data center stocks reacting to the plans, source: Bloomberg via periodical summary.
• PJ Millennium Limited Partnership agreed to acquire a 38.08% stake in VNET Group from Shandong Hi-Speed Holdings Group Limited for about US$942.2m, at a stated value of US$1.4486 per share. The deal is pending Shandong Hi-Speed shareholder approval and is targeted for completion in Q4 2026.
• VNET Group reaffirmed its 2026 earnings guidance and kept expected total net revenues in the range of RMB 11.5b to RMB 11.8b. The company indicated this outlook is unchanged from earlier estimates.
• A proposed US$5.875m class action settlement related to VNET Group American Depositary Shares purchased between March 23, 2022 and February 17, 2023 has been announced. A settlement hearing is currently scheduled for August 27, 2026 in the United States District Court for the Southern District of New York.

Valuation Changes for VNET Group

• Fair Value: trimmed from $23.89 to $22.30, a reduction of about 6.7% in the updated model.
• Discount Rate: nudged higher from 13.76% to 13.82%, indicating a slightly higher required return in the appraisal of VNET Group.
• Revenue Growth: revised from 21.10% to 24.15%, reflecting a higher projected CN¥ revenue growth rate in the latest assumptions.
• Net Profit Margin: adjusted from 7.65% to 10.50%, implying a higher expected CN¥ earnings margin on future sales.
• Future P/E: brought down from 51.57x to 31.12x, a substantial reduction in the multiple applied to projected earnings.