Goldman: Raises VNET's (VNET.US) target price to USD12.1, reiterates "Buy" rating

Following Morgan Stanley, Goldman also released its latest research report, bullish on the upside potential and configuration value of VNET (VNET.US). According to the latest research report, Goldman raised its target price for VNET by 142% to US$12.1 and reiterated its "buy" rating.

Recently, several leading technology companies, including DeepSeek, Doubao 1.5 Pro from ByteDance, and Moonshot's Kimi k1.5, have rolled out new-generation large models. Goldman believes that AI is still in its early stages, and the launch of these new models has accelerated the growth of AI inference demand. More importantly, as the cost of AI training and inference decreases, the development of AI computing infrastructure is transforming from "high-cost constraints" to "sustainable growth", bringing more long-term development opportunities to the data center industry and further boosting the demand for high-performance data centers.

Against the backdrop of rapidly growing AI-driven data center demand, Goldman noted that VNET has successfully grabbed a significant share of the Chinese AI market with its newly built base data center parks. The company achieved lower electricity costs through access to green power and won high trust from customers with its outstanding delivery capabilities. Goldman expects VNET's EBITDA to grow by 12%, 17%, and 22% year-on-year in 2024, 2025, and 2026, respectively, which will effectively drive the continuous growth of its equity value.

At the same time, Goldman raised VNET's EV/EBITDA multiple to 10x over the next 12 months. This adjustment is mainly driven by the growing optimism in the AI sector, the continuous growth of its base data center revenue and EBITDA, and the company's valuation still has significant upside potential compared to the global industry average. In addition, Goldman's analysis suggests that the sustainable growth model of the AI industry has led to a continuous increase in the funding needs of the data center industry, and future REITs and debt financing activities may accelerate to support capital recycling and deleveraging, further driving capacity expansion and enhancing shareholder value.