VNET Group Surges 9.98% on China AI Infrastructure Boom: A Strategic Play in the Data Center Gold Rush?

Summary
• VNET Group (VNET) surges 9.98% to $11.405, driven by a 40MW data center order and Alibaba’s $53B AI investment.
• Revenue jumps 22% YoY to $340M in Q2 2025, but EPS misses estimates at -$0.06.
• Morgan Stanley upgrades price target to $14, while Jefferies calls VNET a 'Top Pick' with a $25.13 target.

VNET’s intraday rally reflects China’s AI infrastructure boom, with the stock trading near its 52-week high of $16.13. The 40MW Gu’an IDC Campus order and Alibaba’s AI expansion are fueling optimism, despite high leverage and near-term profitability risks. Investors are weighing rapid revenue growth against debt-fueled expansion and sector competition.

China AI Infrastructure Boom Drives VNET's Record Intraday Gains
VNET’s 9.98% surge to $11.405 is directly tied to its 40MW data center order for the Gu’an IDC Campus, a strategic win in China’s AI-driven cloud market. Alibaba’s $53B AI investment and the China Academy of Information and Communications Technology’s 24% YoY AI sector growth to 900B yuan have amplified demand for hyperscale infrastructure. VNET’s deployment of domestic chip servers and liquid cooling technology aligns with Beijing’s AI priorities, while Morgan Stanley’s $14 price target and Jefferies’ $25.13 upgrade signal strong institutional backing. However, the stock’s 9.98% move must be viewed alongside its 300% debt-to-equity ratio and Q2 EPS miss, which highlight execution risks.

Data Processing & Outsourced Services Sector Gains Momentum as AI Demand Surges
The Data Processing & Outsourced Services sector, led by Equinix (EQIX), is experiencing renewed interest amid AI infrastructure demand. While EQIX fell -0.35% intraday, VNET’s 9.98% rally underscores its unique positioning in China’s AI ecosystem. Unlike EQIX’s global hyperscale focus, VNET’s 40MW Gu’an project and 55% pre-committed 307MW under construction position it to capitalize on China’s AI-driven data center expansion. Sector trends, including hybrid outsourcing and AI-powered data extraction, further validate VNET’s growth narrative, though its high leverage contrasts with EQIX’s more conservative balance sheet.

Options and ETF Playbook: Capitalizing on VNET’s AI-Driven Momentum
• RSI: 72.71 (overbought), MACD: 0.54 (bullish), 200D MA: $7.45 (well above), Bollinger Bands: $10.71 (upper), $8.88 (middle), $7.05 (lower).
• Key Levels: Support at $8.88 (200D MA), resistance at $10.71 (Bollinger upper).
• Short-Term Outlook: Bullish on AI infrastructure tailwinds, but watch for profit-taking near $11.68 (intraday high).

Top Options:
• VNET20251017C11 (Call, $11 strike, Oct 17 expiry):
- IV: 95.11% (high volatility), Leverage: 8.78%, Delta: 0.612, Theta: -0.03298 (rapid time decay), Gamma: 0.1405 (price-sensitive).
- Payoff: At 5% upside ($12.00), intrinsic value = $1.00. High leverage and gamma make this ideal for a breakout.
• VNET20251121C12 (Call, $12 strike, Nov 21 expiry):
- IV: 103.36% (extreme volatility), Leverage: 12.02%, Delta: 0.479, Theta: -0.03382 (aggressive decay), Gamma: 0.1345 (price-sensitive).
- Payoff: At 5% upside ($12.00), intrinsic value = $0.00 (at-the-money). High IV and leverage suit aggressive bulls.

Action: Aggressive bulls may consider VNET20251017C11 into a breakout above $11.68, while hedgers might use VNET20251121P11 (Put, $11 strike) for downside protection. Position for a continuation above $10.71 or tighten stops below $8.88.

Backtest VNET Group Stock Performance
I may have mis-interpreted “10 % intraday surge.” To be sure the back-test matches what you have in mind, could you please confirm which definition you prefer for the surge event?A) Close-to-Close jump ≥ 10 %  (current day’s close ÷ prior day’s close − 1 ≥ 10 %)B) Open-to-High intraday jump ≥ 10 %  (intraday high ÷ same day’s open − 1 ≥ 10 %)C) Something else (please specify)Once I have your preferred definition, I’ll rebuild the event list and run the back-test from 2022-01-01 to today.

VNET’s AI Infrastructure Play: Position for a Breakout or Tighten Stops Below $10.14
VNET’s 9.98% rally reflects its strategic role in China’s AI infrastructure boom, but its 300% debt-to-equity ratio and Q2 EPS miss demand caution. The 40MW Gu’an project and Alibaba’s AI investments validate long-term growth, yet near-term risks include profit-taking and margin pressures. Watch for a breakout above $11.68 (intraday high) or a breakdown below $10.14 (intraday low). Sector leader Equinix (EQIX) fell -0.35%, highlighting VNET’s divergence. Action: Position for a breakout above $11.68 or tighten stops below $10.14 to manage risk in this high-conviction AI play.