Baron Opportunity Fund on GDS Holdings Limited

GDS develops and leases data-center capacity to major technology companies across Asia and is positioned to benefit from cloud adoption, data growth and increasing AI demand. The manager believes power constraints should sustain pricing power while bookings indicate that an AI investment wave in China is beginning to build. The fund is focused on the long-term earnings opportunity rather than the exact timing of the company's near-term growth inflection. It also sees underappreciated value in GDS's stake in DayOne, its international subsidiary, which could eventually list publicly at a substantially higher valuation. Long-term take-or-pay contracts provide additional visibility into the revenue ramp.