VNET Group Inc

VNET Group Inc (NASDAQ: VNET) is a China-based data center and cloud infrastructure company that provides carrier-neutral and cloud-neutral services, including managed retail and wholesale hosting, cloud computing solutions, and VPN connectivity services, enabling enterprises to operate secure and scalable digital infrastructure across the domestic market.

Key Growth Prospects

• AI-Driven Wholesale Expansion Strengthens Growth Visibility: VNET Group delivered strong operational momentum in FY2025 as rising artificial intelligence (AI), cloud computing, and enterprise digital transformation demand continued to accelerate wholesale data center adoption across China. The company’s wholesale IDC business remained the key growth engine, with capacity in service increasing to 889MW by the end of 2025, supported by record annual deliveries of 404MW and customer utilization reaching 623MW. The utilization rate stood at 70.1%, while mature capacity utilization remained exceptionally strong at 93.1%, highlighting healthy demand absorption across existing facilities. Management emphasized that the company’s “Dual-Core Strategy” and “Hyperscale 2.0” framework positioned VNET to capture large-scale AI infrastructure demand while strengthening its competitive positioning in the Greater Beijing Area and Yangtze River Delta regions.
• Robust Order Wins and Capacity Pipeline Support Long-Term Expansion: The company continued to secure significant hyperscale customer commitments during the quarter, reflecting sustained enterprise and cloud provider demand for high-performance computing infrastructure. During 4Q25, VNET secured five wholesale orders totaling approximately 135MW, including orders from internet companies, cloud service providers, and intelligent driving customers. Management also highlighted that demand across AI inference, smart computing, and edge computing applications continued to expand, supporting future utilization growth. VNET’s wholesale resource reserve increased to approximately 2.2GW, including 452MW under construction and 840MW held for future development, providing substantial long-term expansion visibility amid tightening supply conditions in China’s data center industry.
• Revenue and EBITDA Growth Outperformed Guidance: VNET reported strong financial performance during FY2025, driven primarily by rapid wholesale IDC revenue growth and improving operational efficiency. Total net revenues increased 20.5% year-over-year to RMB9.95 billion, while adjusted EBITDA rose 22.6% to RMB2.98 billion, both exceeding prior guidance. Wholesale IDC revenues surged 77.4% year-over-year to RMB3.46 billion, supported by accelerated customer move-ins and increased AI-related infrastructure demand. Fourth-quarter total revenue increased 19.6% year-over-year to RMB2.69 billion, while adjusted EBITDA reached RMB805.1 million. The company also maintained healthy profitability metrics, with adjusted cash gross margin improving to 42.3% during the quarter due to operational efficiency improvements and economies of scale.
• Capital Recycling and Financing Strategy Enhance Financial Flexibility: VNET advanced its capital recycling initiatives aggressively during FY2025 to support future expansion while optimizing its balance sheet. The company successfully issued China’s first holding-type real estate green asset-backed security (ABS) in the IDC sector, raising approximately RMB860 million with a valuation multiple near 13x EV/EBITDA. In March 2026, two private REIT projects were also listed on the Shanghai Stock Exchange with a combined offering size of approximately RMB6.36 billion. Management indicated that proceeds from these initiatives would be reinvested into future data center expansion and used to optimize leverage levels. The company maintained a solid liquidity position with RMB6.58 billion in cash, restricted cash, and short-term investments, while operating cash inflow reached RMB1.92 billion for FY2025.
• 2026 Outlook Reflects Confidence in AI Infrastructure Demand: Management provided a strong FY2026 outlook supported by robust hyperscale customer demand, accelerating AI adoption, and continued operational execution. VNET expects FY2026 revenue to range between RMB11.5 billion and RMB11.8 billion, implying year-over-year growth of 15.6% to 18.6%, while adjusted EBITDA is projected between RMB3.55 billion and RMB3.75 billion, representing growth of 19.2% to 25.9%. The company plans to deliver 450MW to 500MW of additional capacity during 2026 and expects capex between RMB10 billion and RMB12 billion to support infrastructure expansion. Management also noted that the majority of 2026 capex would directly support near-term delivery plans rather than longer-dated projects, reinforcing confidence in visible customer demand and deployment schedules.
• ESG and Green Infrastructure Initiatives Improve Strategic Positioning: VNET continued to strengthen its sustainability profile and green infrastructure strategy during FY2025. The company reiterated its commitment to achieving operational carbon neutrality and 100% renewable energy usage by 2030 while continuing to improve power efficiency across its data center portfolio. Management highlighted progress in source-grid-load-storage integrated energy projects, particularly in Ulanqab, where green power integration remains a strategic focus for AI infrastructure development. The company also maintained strong ESG recognition, including inclusion in the S&P Global Sustainability Yearbook 2026 and achieving an MSCI “A” rating for the fourth consecutive year. These sustainability initiatives could strengthen VNET’s attractiveness among hyperscale customers increasingly prioritizing low-carbon infrastructure deployment.
• Elevated Capex and Leverage Requirements Could Pressure Financial Metrics: Despite the strong growth trajectory, VNET continues to operate in a highly capital-intensive industry that requires substantial ongoing investment. The company’s FY2026 capex guidance of RMB10 billion to RMB12 billion represents a significant increase from FY2025 levels, primarily to support the planned delivery of 450 to 500 megawatts of additional capacity. While management highlighted multiple financing channels including project loans, REIT monetization, operating cash flow, and potential equity financing, continued aggressive expansion could elevate leverage levels and financing risks if demand growth moderates or project monetization timelines are delayed. The company’s total debt also increased to nearly RMB20 billion by the end of FY2025, reflecting the scale of its ongoing infrastructure investments

Key Risks:

• High Capital Intensity Risk: Large-scale data center expansion requires substantial ongoing capital expenditure and financing support.
• Utilization Risk: Future profitability remains dependent on maintaining high occupancy and customer utilization levels across newly delivered capacity.
• Competitive Industry Environment: Intensifying competition within China’s IDC and AI infrastructure market could pressure pricing and margins.
• Regulatory and Energy Constraints: Data center operations remain exposed to regulatory approvals, energy availability, and environmental compliance requirements

Technical Observation (on the daily chart):

• VNET Group’s stock has shown improving bullish momentum after rebounding from the recent consolidation range near USD 8.50–USD 9.00.
• The stock is currently trading above both the 20-day moving average (USD 9.04) and the 50-day moving average (USD 9.07), indicating strengthening short-term trend support.
• A recent move toward the USD 10.00 level was supported by higher trading volume, reflecting renewed investor participation and buying interest.
• The RSI is near 59, suggesting positive momentum while remaining below overbought territory, leaving room for additional upside potential.
• Immediate support is positioned near the USD 9.00 region around the key moving averages, which may act as an important near-term technical base.
• Sustained trading above support levels could reinforce bullish momentum, while weakness below this range may result in renewed consolidation pressure.

VNET Group delivered strong FY2025 operational and financial performance driven by accelerating AI-related wholesale data center demand, large-scale capacity expansion, and improving operating efficiency. The company’s substantial order pipeline, robust delivery schedule, and strategic capital recycling initiatives provide long-term growth visibility within China’s rapidly expanding AI infrastructure market. However, elevated capex requirements, increasing leverage associated with aggressive expansion, and dependence on continued hyperscale customer demand may remain key areas for investors to monitor as the company scales its infrastructure footprint.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been VNET Group Inc (NASDAQ: VNET) at the current market price of USD 10.00 as of May 15,2026 at 8:28 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is May 15,2026. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.