Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers.  Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.</li>
<li>DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.</li>
<li>Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers' ability to meet their contracted offtake agreements.</li>
</ul>


DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers.  Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.
DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.
Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers' ability to meet their contracted offtake agreements.


DATA CENTER SECTOR: From the Tip of the Spear to Canary in the Coal Mine

Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Thematic (Sector/Industry)

<ul>
<li>Validation of power scarcity: The Macquarie, GIC, and Anthropic deal proves grid access is the ultimate moat, establishing a massive valuation floor for existing powered data center assets.</li>
<li>Disintermediation threat: Sovereign funds acting as direct developers bypass traditional REITs, structurally shrinking the future pipeline of stabilized mega-assets available for public market drop-downs.</li>
<li>Asian operators hold the keys: Developers like GDS with actionable power pipelines in high-demand corridors are prime targets for sovereign joint ventures, offering desperately needed grid access.</li>
</ul>


Validation of power scarcity: The Macquarie, GIC, and Anthropic deal proves grid access is the ultimate moat, establishing a massive valuation floor for existing powered data center assets.
Disintermediation threat: Sovereign funds acting as direct developers bypass traditional REITs, structurally shrinking the future pipeline of stabilized mega-assets available for public market drop-downs.
Asian operators hold the keys: Developers like GDS with actionable power pipelines in high-demand corridors are prime targets for sovereign joint ventures, offering desperately needed grid access.


Macquarie, GIC, Anthropic: A Sovereign Threat: How the Theseus AI Deal Rewires Data Center Equities

Equity Research Analyst - Long-Short

Raj S, CA, CFA

Equity Bottom-Up

<ul>
<li>Improving policy visibility on chips and geopolitics restores confidence in China’s AI infrastructure outlook.</li>
<li>Explosive AI-token growth is driving sustained hyperscaler build cycles and stronger IDC order pipelines.</li>
<li>GDS’s balanced China and DayOne portfolio supports double digit EBITDA CAGR; catalysts include new orders, C-REIT and DayOne IPO, implying 60-100% re-rating potential.</li>
</ul>


Improving policy visibility on chips and geopolitics restores confidence in China’s AI infrastructure outlook.
Explosive AI-token growth is driving sustained hyperscaler build cycles and stronger IDC order pipelines.
GDS’s balanced China and DayOne portfolio supports double digit EBITDA CAGR; catalysts include new orders, C-REIT and DayOne IPO, implying 60-100% re-rating potential.


GDS Holdings (GDS US): Best Play on China AI Infra With Chips-Geo Clarity and Hyperscaler Capex

<ul>
<li>China's cloud companies like <a href="https://www.smartkarma.com/entities/kingsoft-cloud-holdings-limited" target="_blank" data-smartkarma-citation="entities:36647:1" rel="noopener">Kingsoft Cloud Holdings (3896 HK)</a> and <a href="https://www.smartkarma.com/entities/ming-yuan-cloud-group" target="_blank" data-smartkarma-citation="entities:29268:1" rel="noopener">Ming Yuan Cloud Group (909 HK)</a> benefit from the democratization of AI its concurrent increased data needs.</li>
<li>China's telecom companies like <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> , <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a> and <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom (H) (728 HK)</a> are now major players in the country's AI ecosystem.</li>
<li>China's data center companies like GDS Holdings (9698 HK) , 21Vianet Group (VNET US) , and SUNeVision Holdings (1686 HK) are benefiting from the increased data needs of AI industry.</li>
</ul>


China's cloud companies like Kingsoft Cloud Holdings (3896 HK) and Ming Yuan Cloud Group (909 HK) benefit from the democratization of AI its concurrent increased data needs.
China's telecom companies like China Mobile (941 HK) , China Unicom Hong Kong (762 HK) and China Telecom (H) (728 HK) are now major players in the country's AI ecosystem.
China's data center companies like GDS Holdings (9698 HK) , 21Vianet Group (VNET US) , and SUNeVision Holdings (1686 HK) are benefiting from the increased data needs of AI industry.


Deepseek Rally Creates Winners in CLOUD, TELECOM and DATA CENTERS

<ul>
<li>Policy clarity and domestic GPU shift remove key overhangs; China’s AI build-out proceeding under self-reliance base case.</li>
<li>AI token usage doubling every 3–6 months makes hyperscaler capex upgrades inevitable over the coming quarters - a key catalyst driving order wins.</li>
<li>VNET’s 400 MW annual additions and REIT monetisation support 25–30% EBITDA CAGR per consensus; re-rating to 13-15x EV/ EBITDA from current 11x EV/EBITDA implies potential of 90% upside.</li>
</ul>


Policy clarity and domestic GPU shift remove key overhangs; China’s AI build-out proceeding under self-reliance base case.
AI token usage doubling every 3–6 months makes hyperscaler capex upgrades inevitable over the coming quarters - a key catalyst driving order wins.
VNET’s 400 MW annual additions and REIT monetisation support 25–30% EBITDA CAGR per consensus; re-rating to 13-15x EV/ EBITDA from current 11x EV/EBITDA implies potential of 90% upside.


VNET Group (VNET US) - Re-Rating On: Clarity on Chips, Geopolitics, and Hyperscaler Capex

China

GDS Holdings Limited operates as a holding company. The Company, through its subsidiaries, develops and operates data centers. GDS Holdings offers risk and security management, information technology planing, remote monitoring, cloud hosting, virtualization, disaster recovery, and remote data protection services.

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GDS Holdings (ADR) (GDS US)

DATA CENTER SECTOR: From the Tip of the Spear to Canary in the Coal Mine

The sudden plunge in demand for an Nvidia-backed data center company’s initial public offering is revealing fresh cracks in the AI funding boom....

David Mudd

Macquarie, GIC, Anthropic: A Sovereign Threat: How the Theseus AI Deal Rewires Data Center Equities

Validation of power scarcity: The Macquarie, GIC, and Anthropic deal proves grid access is the ultimate moat, establishing a massive valuation...

Jacob Cheng

GDS Holdings (GDS US): Best Play on China AI Infra With Chips-Geo Clarity and Hyperscaler Capex

GDS US offers the best bet on China AI Infra with its dual growth engine (domestic and new international) now that there is Chips and Geopolitics...

Raj S, CA, CFA

Deepseek Rally Creates Winners in CLOUD, TELECOM and DATA CENTERS

Cloud, Telecom and Data Center companies are winners from the DeepSeek sparked AI revolution. Increased data storage, processing and distribution...

David Mudd

VNET Group (VNET US) - Re-Rating On: Clarity on Chips, Geopolitics, and Hyperscaler Capex

Please check the recent upgrade note we published on VNET (link below). The thesis has only become stronger post the 3Q (execution, leverage, no...

Raj S, CA, CFA

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