If you’ve been watching the Hang Seng lately, you’ve probably noticed something weird. Amidst the general noise of tech volatility, a certain data center giant has been putting up numbers that make people do a double-take. I’m talking about GDS Holdings. Specifically, the gds hong kong stock listed under the ticker 9698.
Honestly, for a long time, GDS was the stock everyone loved to hate. It was the "growth at all costs" poster child that got caught in the crosshairs of Chinese regulatory crackdowns and high interest rates. But things changed. Fast.
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As of mid-January 2026, we’re looking at a company that has fundamentally rewired itself. It’s no longer just a "China play." It’s a complex, multi-national infrastructure beast that just pulled off one of the smartest corporate "divorces" in recent memory. If you’re looking at your portfolio and wondering if you missed the boat or if the ice is about to crack, let’s get into the weeds of what’s actually happening.
The Big Split: Why DayOne is the Secret Sauce
You can't talk about the gds hong kong stock without talking about DayOne. Formerly known as GDS International, this is the arm that handles everything outside of mainland China—think Singapore, Malaysia, Indonesia, and Japan.
In early 2025, GDS did something bold. They started spinning this off. Just this week, news broke that DayOne is repurchasing $385 million in shares from the parent company.
Why does this matter to you?
Basically, GDS is "recycling" its capital. They’ve managed to turn a relatively small initial investment into a minority stake in an international entity valued at roughly $10 billion. By selling down their stake (now around 24-38% depending on who you ask and which dilution model they use), the HK-listed GDS is drowning in fresh cash. They aren't just burning money to build centers anymore; they’re harvesting the wins.
This move does two things:
- It ringfences the regulatory risk. If the US or China gets grumpy about data sovereignty, the international business is technically separate.
- It allows the Hong Kong entity (9698) to focus on its "core" China business, which is finally starting to turn a profit.
Let’s Talk Cold, Hard Numbers
Data centers are basically digital real estate. You build a massive box, fill it with servers, and collect rent. For years, GDS was building the boxes but the "rent" (utilization rate) was lagging.
That’s over.
Looking at the latest 2025 filings, the revenue grew by double digits—around 10.2% to 12.4% year-over-year. But the real shocker? They swung from a massive net loss to a net income of over RMB 700 million in some quarters. Their adjusted EBITDA margin is sitting comfortably at 46.5%.
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When a company this size goes from "losing money on every server" to "printing cash," the market tends to react violently. In the first two weeks of 2026, the gds hong kong stock surged over 17%. It's currently trading around the HK$41.74 mark, which is a far cry from the sub-HK$10 lows we saw in early 2024.
The AI Catalyst
We have to mention the "A-word." Artificial Intelligence isn't just a buzzword here; it's a physical requirement. Every LLM (Large Language Model) being trained by Alibaba, Tencent, or Baidu needs a home.
GDS is that home.
They are the largest carrier-neutral provider in China with about a 14% market share. While the big three telcos (China Telecom, etc.) own the pipes, GDS owns the premium real estate in Tier 1 cities like Shanghai and Beijing. Demand for "inference"—the part of AI that actually answers your questions—is skyrocketing. That requires data centers close to the users. GDS has the locations. Nobody else can just "build" a new data center in downtown Shanghai overnight. The permits alone are a nightmare.
The Risks: It’s Not All Sunshine
Don't get it twisted; this isn't a "risk-free" moonshot. If you’re trading gds hong kong stock, you need to be aware of the "China Discount."
Even though they've spun off the international arm, the majority of their revenue still comes from mainland China. That means they are subject to the whims of the PRC’s energy policies. Data centers eat electricity like crazy. If the government decides to tighten "green energy" mandates, GDS’s operating costs could spike.
Then there's the debt.
Developing data centers is capital intensive. We're talking billions in long-term borrowings. While they’ve been smart about using C-REITs (Real Estate Investment Trusts) to offload mature assets and get cash back, the interest rate environment still matters. If rates stay higher for longer, that debt becomes a heavier anchor.
What the Analysts are Whispering
Right now, the consensus is surprisingly bullish. DBS Bank recently lifted its target price to HK$49. Some aggressive estimates from places like Fintel or Morningstar suggest a "fair value" closer to HK$55 if the DayOne IPO happens by the end of 2026.
But here’s the thing: analysts are often wrong.
The real indicator is the "Golden Cross" and "Range Breakout" patterns we saw on the charts last week. Technical traders have piled in because the stock finally broke above its 52-week moving averages. When the "math nerds" and the "fundamental geeks" both start buying at the same time, it usually signals a structural shift in how the market views the company.
Actionable Insights for the 9698 Ticker
So, what do you actually do with this information?
- Watch the DayOne IPO: This is the massive catalyst. If the international arm goes public in late 2026 at a $10B+ valuation, the parent GDS stock in Hong Kong will likely see a "valuation re-rating."
- Monitor the C-REIT Injections: GDS is moving toward an "asset-light" model. Every time they sell a mature data center into their REIT, they get a lump sum of cash. This reduces their debt and makes the balance sheet look way sexier.
- Check the Utilization Gap: Keep an eye on the "area utilized" vs "area in service." Currently, it’s around 74%. If that number creeps toward 80%, it means they are maximizing their existing buildings without having to spend a dime on new construction. That’s pure profit.
GDS Hong Kong stock has transitioned from a speculative tech bet to a backbone infrastructure play. It’s no longer about "will they survive?"—it’s about "how much of the AI pie will they eat?"
If you're looking for a way to play the Asian AI boom without buying the chip makers directly, this is arguably the most direct physical proxy available on the HKEX right now. Just keep an eye on those energy regulations in Beijing.
Next Step: Review the latest GDS 6-K filings or the DayOne Series C funding details to verify the exact dilution of the parent company's stake, as this will dictate how much of the "international prize" actually belongs to HK:9698 shareholders.