NextDC Shares Crash 37% After Melbourne Power Delay Forces Data Centre Operator to Slash FY27 Guidance

SYDNEY — Shares of NextDC Ltd. plunged more than 37% on Wednesday, wiping billions of Australian dollars off the data center operator's market value after it cut its earnings forecast because of a power supply delay at a major Melbourne facility.

NextDC shares fell 3.44 Australian dollars, or 37.47%, to A$5.74 in afternoon trading after resuming from a trading halt. The stock dropped as low as A$5.07 and traded as high as A$5.87, with more than 33 million shares changing hands, far above normal volume. The company's market value fell to about A$4.4 billion, from about A$7 billion when the shares last traded on Friday at A$9.18.

The shares are down about 65% over the past year.

Guidance cut

NextDC lowered its fiscal 2027 revenue and earnings guidance, citing delays in securing power for its M3 data center in West Footscray, in Melbourne's west.

The company said power infrastructure upgrades needed to supply the facility had been suspended amid opposition from local residents and other stakeholders. Electricity distributor Jemena does not expect to resume the work before February 2027, according to NextDC.

The dispute reportedly centers on the installation of concrete power poles in nearby Yarraville, where residents blocked work in August, according to the Australian Broadcasting Corp.

Trading halt

NextDC requested a trading halt on Monday to assess the impact of the delay. At the time, it said its board had not yet met to consider the situation.

In its request to the ASX, the company said "the Board has not yet met to consider the M3 power delay." The company said it needed to assess the impact, including on its fiscal 2027 financial guidance.

Analysts warn of longer impact

Citi analysts estimated before the update that the delay could put about A$25 million of NextDC's fiscal 2027 operating earnings at risk. They said M3 represented about 70 megawatts of the 155 megawatts of new billing capacity the brokerage had assumed for the company in Victoria in fiscal 2027.

Following the guidance cut, Citi said the power delays could affect earnings beyond fiscal 2027, citing delays to approvals for the M3 expansion and a longer-than-expected timeline for transformer upgrades.

AI bottleneck

NextDC has been one of the Australian market's most prominent ways to invest in the boom in cloud computing and artificial intelligence. The company builds and operates large data centers that house servers for technology companies, governments and businesses.

But the M3 delay highlights a growing challenge for the industry: access to electricity. AI data centers require enormous amounts of power, and grid constraints, community opposition and slow approvals are increasingly emerging as bottlenecks.

Ripple effects

The news weighed on engineering and electrical contracting companies that have benefited from data center construction. SKS Technologies Group fell about 11%, and Southern Cross Electrical Engineering dropped about 10%.

A prolonged slide

NextDC shares had already fallen for seven straight weeks before Wednesday's collapse, amid broader concerns about AI spending and rising interest rates.

What's next

Investors will be watching for any progress in resolving the power dispute, updates on the timing of M3 capacity, and whether NextDC needs to make further changes to its outlook or funding plans.