VNET surges 25% on $942 million deal to power AI data centers

A strategic investment by a CATL affiliate signals a major push to integrate battery supply chains directly with the power-hungry AI data center market.

VNET Group Inc. (Nasdaq: VNET) shares surged over 25% after affiliates of battery giant Contemporary Amperex Technology Co. agreed to buy a 38.1% stake for approximately $942 million, a strategic move to build a vertically integrated energy storage system for China's growing fleet of AI data centers. The deal shows the immense power demands of artificial intelligence are forcing convergence between technology infrastructure and the energy sector.

"We will work closely with our strategic partners to deepen collaboration across technology and supply chains, and to jointly advance original, end-to-end innovation across the next generation of the AIDC industry," said Josh Sheng Chen, Founder and Executive Chairperson of VNET.

The deal will see two PJ Millennium Limited Partnership subsidiaries acquire up to 650.4 million Class A shares from current holders at $8.6914 per American depositary share. The transaction, expected to close in Q4 2026, gives the CATL-linked buyers significant influence, backed by a voting agreement with VNET's founder. VNET's stock closed Wednesday at $11.28, with trading volume hitting 63.9 million shares, a 754% increase over its three-month average.

For CATL, the investment secures a key downstream partner in the high-growth AI data center market, creating a captive customer for its battery and energy storage solutions. For VNET, the deal provides a strategic partner and capital to expand its AI data center capabilities in a competitive market that includes rivals like GDS Holdings (Nasdaq: GDS), whose stock also rose 6.9% on the news.

A New Energy Blueprint for AI

The partnership is the "most direct execution" of CATL's strategy to build a vertically integrated energy ecosystem for AI data centers, according to a note from JP Morgan, which rates CATL stock as Overweight with a HKD725 price target. As AI models become more complex, the power required to train and run them is a significant and growing operational cost for data center operators.

By partnering with a battery manufacturer, VNET can potentially secure more stable and cost-effective power, a key competitive advantage. The deal is structured as a share purchase from existing investors, primarily entities owned by Shandong Hi-Speed Holdings Group, rather than a direct capital raise for VNET. However, the alignment with a major energy supplier is seen by investors as a critical step for VNET's expansion in the high-density computing space.

Competitive Landscape

The move pressures other data center providers in China and globally to formulate their own energy strategies. While VNET's capacity in megawatts was not disclosed, the scale of the investment suggests a significant buildout is planned. The deal also includes investor rights and voting agreements that will support the "stability of control" of the company under its founder, Mr. Chen, ensuring a consistent long-term strategy. Investors will now watch for whether the CATL partnership helps VNET secure new customers, power, or capacity commitments for its AI data center ambitions before the deal's expected close in late 2026.

This article is for informational purposes only and does not constitute investment advice.