NextDC Shares Climb 3% as Data Centre Stock Extends Rebound From Eight-Year Low After Melbourne Power Shock

SYDNEY — Shares of data center operator NextDC Ltd. rose more than 3% on Monday, continuing a recovery from an eight-year low reached after the company slashed its earnings forecast because of a power delay at a Melbourne facility.

NextDC shares climbed 20 cents, or 3.41%, to 6.07 Australian dollars in afternoon trading, after moving between A$5.68 and A$6.08. Nearly 6 million shares traded, making it one of the most active stocks among the day's top gainers. The company has a market value of about A$4.6 billion.

The rise came even as technology stocks broadly weakened in Australia following a sell-off in AI-related shares on Wall Street.

It was not immediately clear what drove Monday's gain.

A dramatic crash

NextDC's shares collapsed last month after a delayed power upgrade for its Melbourne M3 data center forced the company to cut its fiscal 2027 revenue and earnings guidance.

The stock plunged around 40% in a single day as investors reacted to the news. Reports said community opposition had stalled a grid upgrade needed to supply power to the facility.

The setback highlighted growing challenges for AI infrastructure, including power constraints and local resistance to large data centers.

Liquidity update sparks recovery

Shares rebounded sharply last Wednesday after NextDC released an update addressing concerns about its financial position. The stock jumped about 10% that day.

The company confirmed it was in compliance with its financial covenants and reported A$8.7 billion in liquidity as of September 2026. NextDC said its other Melbourne M3 contracts remain fully operational and unaffected by the delay. The next covenant test is scheduled for Dec. 31.

The company has also said it is renewing its board and introducing cost cuts following the guidance revision.

Strong year before the setback

The power delay came after a record year for the company. In August, NextDC reported fiscal 2026 revenue up 16% to A$496.5 million.

"FY26 was the largest contracting year in NEXTDC's history," Chief Executive Craig Scroggie said at the time.

The company spent a record A$3.4 billion on capital expenditures during the year as it raced to build capacity for cloud and AI customers. Before last month's downgrade, it had forecast fiscal 2027 net revenue of A$615 million to A$640 million.

Steep losses for investors

Despite the recent bounce, NextDC shares remain far below their highs. The stock is down nearly 61% over the past year, reflecting both the power setback and broader concerns about AI infrastructure spending.

Some analysts see value after the sell-off, pointing to long-term customer contracts and strong demand for data center capacity. Others warn that delays and financing needs could keep the stock volatile.

AI spending debate

NextDC's fortunes are closely tied to the global AI boom, which has driven demand for data center capacity from cloud providers and technology companies.

That trade has come under pressure in recent weeks as investors question whether massive AI investments will produce adequate returns, following weak cash flow reports from tech giants such as Alphabet and Amazon.

Investors will watch for progress on resolving the Melbourne power delay, further cost-cutting measures and any updates to guidance. The December covenant test will also be closely watched as a signal of the company's financial health.