15 Best Data Center Stocks To Buy According to Jefferies, Citi and Wall Street Analysts

3. VNET Group, Inc. (NASDAQ:VNET)

Average Analyst Share Price Target Upside: 92%

Average Analyst Share Price Target: $3.38

Number of Hedge Fund Investors  in Q1 2024: 15

VNET Group, Inc. (NASDAQ:VNET) is a Chinese data center hosting firm headquartered in Guangzhou, China. Key to its hypothesis are VNET Group, Inc. (NASDAQ:VNET)’s ability to expand its customer base, increase the area that its facilities service, land new deals, increase utilization rates, and provide existing customers incentives to stick with it. VNET Group, Inc. (NASDAQ:VNET) hopes to grow its revenue by roughly 5% annually this year, and another key to valuing its stock is the US dollar. A weaker dollar, potentially precipitated by lower interest rates, could mean that VNET Group, Inc. (NASDAQ:VNET) ends up generating more dollar income for investors. At the same time, since it’s a Chinese company, the stock has discounted this too, with the P/S ratio of 0.3 being quite low when compared to GDS’s 3.12.

During its Q1 2024 earnings call, VNET Group, Inc. (NASDAQ:VNET)’s management shared key details for its customer base:

“We kick off 2024 with solid operating and financial results. Our wholesale IDC business continued to gain momentum, driven by rapid customer movements. Capacity in serves was 332 megawatts as of the end of first quarter. Capacity utilized by customers increased by 17 megawatts to 236 megawatts in the fourth quarter, primarily driven by increased demand for the customer in [indiscernible] data center. As a result, the utilization rate of wholesale capacity improved to the 71% with the utilization REITs for mature capacity reaching around 95% and ramp up capacity reaching around 34%.

In addition, the capacity under construction was 139 megawatts with pre-commitment reach of around 75% and the capacity health of future development was 557 megawatts. For our retail business, capacity in service was around 52,000 commitments remaining flat compared to last quarter, with utilization rates stable at 64% and with the utilization rate for mature capacity reaching around 73%. MRR for retail cabinets was 8,742 in the fourth quarter compared to 8,759 for last quarter and 8,874 for the same period last year. Moving on our financial performance. We remain the focus on high-quality revenue business, and our efforts continue to generate positive outcomes, our net revenue increased by 5.1% to CNY 1.9 billion, mainly driven by the continued growth of our core business.”