Megaport Shares Climb 4% as AI Rally Returns After SpaceX Results, Lifting Neocloud Bet Off Recent Lows

SYDNEY — Shares of Megaport rose 4.4% on Thursday as investors returned to Australian AI-related stocks after a rally in U.S. technology shares overnight.

The network and cloud services company's stock gained 71 Australian cents to close at A$16.89. It traded between A$16.38 and A$17.32. Nearly 10 million shares changed hands, well above normal levels, and the company's market value is about A$4 billion.

The gain came on a down day for the broader market. The S&P/ASX 200 fell 0.43%.

Tech rally overseas

The rise followed a strong session on Wall Street, where the Nasdaq composite gained about 1% after SpaceX reported better-than-expected results. SpaceX said its AI business grew about ninefold from a year earlier, and its results helped revive investor interest in AI infrastructure after weeks of concern about rising costs and slow returns.

Chipmakers and AI cloud companies rose broadly in the U.S. Megaport, which sells AI computing capacity as well as network connections, is one of the few ASX companies that gives investors direct exposure to that market.

Megaport did not release any price-sensitive news Thursday.

Off recent lows

Thursday's gain helped the stock recover after a sharp decline this month. Megaport closed at A$22.34 on Oct. 2. It then fell about 10% on Oct. 13 and again on Oct. 15 amid a global selloff in AI-related stocks, closing as low as A$15.64.

Even with that decline, the stock is up about 16% over the past year. Earlier this year, it rose more than 200% in six months from a low in late March and reached a record A$21.96 when the company reported full-year results in August.

AI growth strategy

Megaport has been shifting from mainly cloud connectivity to also selling computing power. That includes access to graphics processing units, the chips used to run AI applications.

Last month, the company announced major new contracts expected to add about US$162.7 million in annual recurring revenue. It expects to receive about A$322.6 million in prepayments, including about A$281.5 million from one new customer.

Megaport has said its annualized EBITDA could exceed A$650 million once all its strategic contracts are being billed. In fiscal 2026, EBITDA was A$77 million.

To fund the expansion, it has committed about A$826 million in capital spending and arranged a debt facility of about A$825 million, along with a capital raise of about A$827 million.

Analysts stay bullish

Bell Potter started coverage with a buy rating, calling Megaport "one of the few direct exposures on the ASX to a neocloud provider." It later lowered its price target to A$26 from A$27 because of lower valuations for similar companies, though it raised its earnings forecasts.

Macquarie raised its target to A$34.70 from A$32 after the contract wins. It said Megaport offers AI exposure with shorter lead times and less capital spending than data center operators.

Several other brokers, including CLSA, Canaccord Genuity and UBS, have buy ratings with targets between about A$28 and A$29.

Risks remain

The business is changing quickly. Megaport's statutory net loss widened to A$39 million in fiscal 2026 from A$300,000 a year earlier because of heavy investment.

Its growth also depends heavily on a few large customers, so delays or changes to those contracts could have a major effect on results.

Investors are also watching the AI infrastructure market more closely after NextDC cut its forecast this week because of a power delay at a Melbourne data center. Megaport has said its model requires less capital than building data centers.

What's next

Megaport's next quarterly update should show how its new contracts are progressing. Investors will look for evidence that its AI business can turn growing revenue into lasting profit.