Is VNET a good stock to buy? We came across a bullish thesis on VNET Group, Inc. on Coughlin Cap’s Substack by Brian Coughlin and P14 Capital. In this article, we will summarize the bulls’ thesis on VNET. VNET Group, Inc.’s share was trading at $9.28 as of June 9th. VNET’s forward P/E was 24.39 according to Yahoo Finance.
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VNET Group, Inc. (VNET) is emerging as one of the most compelling ways to gain exposure to China’s rapidly accelerating AI infrastructure buildout. The company operates more than 50 carrier-neutral and cloud-neutral data centers across over 30 Chinese cities, positioning it as a critical infrastructure provider for hyperscalers such as ByteDance, Alibaba, Tencent, and Baidu.
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Its bullish momentum was reinforced recently when ByteDance signed a landmark 500MW data center agreement with VNET, the largest order in company history, highlighting the scale of demand currently flowing into China’s AI ecosystem. VNET’s wholesale IDC business, which leases large-scale capacity to hyperscalers under multi-year contracts, has become the primary growth engine, expanding roughly 96% year-over-year and increasing in-service capacity nearly 2.7x over the last three years to 783MW.
Importantly, management noted that all planned 2025 deliveries are already fully backed by customer orders, while utilization at mature facilities is approaching 95%, reflecting exceptionally tight supply conditions. The company also benefits from favorable industry dynamics, including China’s “East Data, West Computing” initiative, limited new power approvals, and lower electricity costs in western regions, all of which support healthy pricing and high barriers to entry.
Meanwhile, VNET’s recurring revenue model, long-term contracts, and growing wholesale mix continue driving margin expansion, with adjusted EBITDA margins expected to approach 30% in FY25. As AI infrastructure spending accelerates across China, VNET appears well positioned to benefit from sustained demand, improving profitability, and significant long-term operating leverage.
Previously, we covered a bullish thesis on Applied Digital Corporation by DoU92 in December 2024, which highlighted the company’s AI-focused HPC infrastructure, scalable data center platform, and undervalued positioning within the rapidly growing AI ecosystem. APLD’s stock price has appreciated by approximately 340.23% since our coverage. Brian Coughlin and P14 Capital share a similar view but emphasize on VNET’s hyperscaler-driven wholesale IDC expansion and AI infrastructure tailwinds in China.
VNET Group, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held VNET at the end of the first quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of VNET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VNET and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
