VNET’s (VNET) Capacity Expansion and AI Tailwinds Drive Analyst Optimism

VNET Group Inc. (NASDAQ:VNET) is one of the best data center stocks to buy now. VNET is another pure-play data center operator that has seen a strong performance, up 64% year-to-date and an impressive 319% over the past year. No doubt, demand for capacity from the ever-evolving generative AI and high-performance computing (HPC) is at the core of this investor enthusiasm.

While the company is scheduled to report its results on August 21, expectations remain high, and analyst consensus is overwhelmingly positive. Analyst sentiment has been broadly supportive, indicating confidence in its investment case.

VNET's (VNET) Capacity Expansion and AI Tailwinds Drive Analyst Optimism

A data center filled with the latest servers and networking equipment representing the company’s cutting edge security infrastructure.

First of the two names that have recently published their optimistic reports is Yang Liu from Morgan Stanley. In a report released on July 22, the analyst maintained a Buy rating on VNET Group (NASDAQ:VNET) and raised the price target to $12 from $10.

Back in late June, Citi analyst Louis Tsang also reaffirmed his positive stance on VNET Group Inc. (NASDAQ:VNET), keeping a Buy rating on the stock and a price target of $20, which is closer to the consensus high of $24. At that time, the company had raised its FY 2025 revenue and EBITDA guidance, which was already in line with Tsang’s above-consensus forecasts, reinforcing confidence in its operating momentum.

Tsang highlighted that VNET’s $50 million share repurchase could help stabilize the stock. He also cited upcoming projects such as B30, along with possible Hong Kong and C-REIT listings, as events that may drive further interest. In addition, he noted the company’s partnership with Shandong Highspeed on green power, which is expected to cut energy costs and support margin improvement for VNET Group Inc. (NASDAQ:VNET) and its clients.

Beyond these near-term drivers, Tsang emphasized VNET’s expansion of IDC capacity and its exposure to AI-related demand as important long-term growth levers.

Tsang’s bullish thesis has held up so far, as the stock has gained another 11% since his report. The 1-year median consensus price target for the stock stands at $12.2, which still indicates a substantial potential upside of 56% and further room for the rally to continue.

VNET Group Inc. (NASDAQ:VNET) is a leading pure-play data center provider in China, specializing in multi-carrier and multi-cloud internet data center (IDC) services.

While we acknowledge the potential of VNET to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VNET and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 10 Best Large Cap Tech Stocks to Buy Now and 10 Best Big Tech Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.