UBS: Chinese IDC Sector — Ulanqab IDC Monthly Tracker (March 2026) Signals Positive Q1 Implications
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UBS released its monthly tracker for the Ulanqab internet data center (IDC) hub, revealing robust operational momentum that signals positive implications for Q1 2026 financial results. In March 2026, power consumption in Ulanqab reached 500 GWh, representing a 90.1% year-over-year increase. While this marks a slight moderation from the 98.2% growth in February 2026 and 116.6% in 2025, the absolute volume remains exceptionally high. This consumption level implies a net addition of 37 MW in total data center capacity, calculated as IT power multiplied by Power Usage Effectiveness (PUE).
Cumulatively for Q1 2026, utilized data center capacity in Ulanqab grew by a net 71 MW. This represents a substantial reacceleration compared to a net addition of only 4 MW in Q4 2025, a period constrained by chip supply shortages. This sharp recovery in net capacity additions reflects ongoing customer colocation activity and improving supply chain conditions.
Consequently, UBS views this data as a highly positive leading indicator for VNET's Q1 2026 financial performance and utilization growth. The report also covers valuation frameworks for both VNET and GDS, noting that VNET utilizes a target EV/EBITDA multiple, while GDS employs a sum-of-the-parts (SOTP) methodology. Key downside risks include weaker-than-expected AI demand, elevated interest rates, and data center outages damaging reputations.