GDS Holdings (NasdaqGM:GDS): Evaluating Valuation After Q3 Profit Turnaround and AI-Driven Growth

GDS Holdings (NasdaqGM:GDS) reported a turnaround in profitability for Q3 2025, as revenue growth and demand for AI-related infrastructure pushed results higher. The company also completed a data center REIT IPO.

See our latest analysis for GDS Holdings.

GDS Holdings’ robust Q3 results and AI-driven demand have powered a strong run so far this year, with a share price return of 33.4% year-to-date and a striking 68.9% total shareholder return over the past twelve months. Momentum is clearly building for the company, as recent strategic moves such as the C-REIT IPO and accelerated AI infrastructure growth have reignited investor optimism about its longer-term prospects.

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With GDS Holdings posting accelerating growth and a return to profitability, investors may be wondering if the market is underestimating the company’s potential or if the impressive outlook has already been factored into the share price.

Most Popular Narrative: 35.9% Undervalued

With GDS Holdings last closing at $30.92, the most popular valuation narrative puts its fair value far higher, suggesting there could be significant upside. Let’s look at the reasoning behind this crowd-favorite view.

The successful implementation of China's first data center ABS and C-REIT IPOs has pioneered a pathway for GDS to repeatedly recycle capital at cap rates (and multiples) well above the company's own market valuation. This process allows the company to fund new growth, improve leverage, and enhance ROIC, supporting stronger net earnings over time.

Read the complete narrative.

What bold financial moves and future profit levels back this striking valuation call? The full narrative holds the secrets, especially the dramatic shift in projected earnings power and margin expansion. You’ll want to see which assumptions make this target possible…

Result: Fair Value of $48.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent margin pressure and high leverage remain clear risks. These factors could quickly undermine profit growth and offset bullish earnings projections.

Find out about the key risks to this GDS Holdings narrative.

Another View: Are Valuation Multiples Flashing a Warning?

While analyst models see upside, the current price-to-earnings ratio stands at 37.8 times, higher than the US IT industry average of 27.8 times and the peer group at 24.9 times. Compared to the fair ratio of 25.5 times, this premium hints at elevated expectations and potentially more downside if growth stalls. Could the market be getting ahead of itself?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own GDS Holdings Narrative

If you’re eager to investigate the numbers yourself and reach your own conclusions, it only takes a few minutes to build your personalized outlook. Do it your way.

A great starting point for your GDS Holdings research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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