German Wage Growth Reaches 5.7% in Q2, But Collective Bargaining Deals Suggest Lower Increases Ahead

German wage growth accelerated in Q2, with negotiated pay rising 5.7% YoY, driven by higher permanent increases in retail, wholesale, and public services. However, recent collective-bargaining agreements suggest lower wage increases going forward due to declining inflation rates and a weak economic environment. The ECB is closely monitoring wage growth as they consider their next interest rate move.

GDS Holdings (GDS) has reported its second-quarter (Q2) earnings for the period ended June 2025, showcasing robust performance across its data center operations. The company's GAAP EPS of -$0.06 beat the consensus estimate of -$0.10 by $0.04, while revenue reached $404.9 million, up 4.1% year-over-year (YoY) from the same period last year [2].

The earnings surprise was driven by the company's strong performance in data center operations. Total area committed and pre-committed increased by 8.1% YoY to 663,959 square meters as of June 30, 2025. Area utilized also rose by 14.1% YoY to 479,186 square meters, while area in service grew by 6.5% YoY to 618,060 square meters. The utilization rate improved to 77.5% as of June 30, 2025, from 72.4% a year ago [2].

Despite adjustments for the C-REIT transaction, GDS Holdings reaffirmed its full-year revenue guidance for 2025, with total revenues expected to range from RMB11,290 million to RMB11,590 million. Adjusted EBITDA is projected to be between RMB5,190 million and RMB5,390 million for the year [2].

Wall Street analysts have an average target price of $45.98 for GDS Holdings, with projections ranging from $36.79 to $64.51. This indicates a potential upside of 45.54% from the current market price of $32.14. The consensus among 18 brokerage firms rates GDS with an "Outperform" status, but the estimated GF Value suggests a downside of 48.18% from the current market price [3].

GDS Holdings has consistently outperformed market expectations, with the company's shares adding about 33% since the beginning of the year, compared to the S&P 500's gain of 9%. The company's earnings surprise and strong revenue growth have been driven by its data center operations, which have seen significant expansion and utilization improvements [1].

Investors should keep an eye on the company's earnings call and future guidance to gauge the sustainability of its stock price movement. The company's earnings outlook and industry performance will also play a crucial role in determining its stock's performance in the coming quarters.

References:
[1] https://www.nasdaq.com/articles/gds-holdings-gds-reports-q2-loss-beats-revenue-estimates
[2] https://seekingalpha.com/news/4487365-gds-holdings-gaap-eps-of-0_06-beats-by-0_04-revenue-of-404_9m-beats-by-10_16m
[3] https://finance.yahoo.com/news/gds-holdings-ltd-hkse-09698-131552327.html