Morgan Stanley: GDS Holdings stock faces growth pressure from contract renewals

Investing.com - GDS Holdings Ltd (NASDAQ: GDS) expects mid-single-digit organic EBITDA growth in 2026-27 as legacy contract renewals and markdowns create headwinds of around 4-5 percentage points, according to Morgan Stanley feedback from the Asia AI Summit 2026. The pressure is particularly significant for the five quarters from 2Q26 through 2Q27.

The company anticipates growth will reaccelerate starting in 3Q27 when large orders begin delivering. EBITDA growth could potentially reach mid- to high teens in 2028 if 500MW of bookings are secured in 2026, or even mid-20s if 800MW of bookings are achieved in 2026.

New projects in remote areas are priced at Rmb2.2-2.3 million per MW assuming ex-power monthly service revenue of Rmb250 per month. New projects in tier 1 markets are priced at Rmb2.8-3 million per MW assuming monthly service revenue of Rmb300 per month.

Legacy projects upon renewal are priced at Rmb5 million per MW, declining at 10% year-over-year before stabilizing at approximately Rmb3.5-3.7 million per MW.

Delivery cycles have lengthened to 12 months due to the use of greenfield resources rather than inventory. The company expects delivery times to normalize to six to nine months from 2027 as part of the outer shell construction is completed.

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