GDS Holdings Ltd (NASDAQ: GDS), a leading developer and operator of high-performance data centers in China, saw its stock soar 5.76% in pre-market trading on Tuesday. The significant uptick comes on the heels of the company's robust first-quarter 2025 financial results, which surpassed market expectations.

For the first quarter ended March 31, 2025, GDS Holdings reported a substantial year-over-year increase in key financial metrics. Net revenue climbed 12.0% to RMB 2,723.2 million (US$375.3 million), while net income reached RMB 764.1 million (US$105.3 million), marking a dramatic turnaround from the net loss of RMB 344.9 million in the same period last year. The company's profitability improved significantly, with a net income margin of 28.1% compared to a net loss margin of 14.2% in Q1 2024.

William Huang, Chairman and CEO of GDS, commented on the results, stating, "In the first quarter of 2025, we achieved solid operational and financial performance, driven by our consistently focused strategic execution." He also highlighted a large new hyperscale order across two sites, indicating increasing demand in Tier 1 markets driven by AI developments. Chief Financial Officer Dan Newman added, "Our on-track, steady business growth bore fruit in the first quarter, with revenue increasing by 12.0% and adjusted EBITDA by 16.1% year-over-year, resulting in an adjusted EBITDA margin of 48.6%."

The market's positive reaction to GDS Holdings' earnings report reflects investor confidence in the company's growth trajectory and its ability to capitalize on the expanding data center market in China. As cloud computing and AI continue to drive demand for high-performance data centers, GDS appears well-positioned to benefit from these industry trends.