NextDC Shares Crash 44% as AI Data Centre Revenue Faces Delays

Australian data center operator NextDC’s stock dropped 44% as delays in electrical infrastructure prompted the firm to cut its financial estimates and halt fresh growth plans. The statement reduced its market value by almost A$3.1 billion during early trade on Wednesday.

The setback centres on the company’s M3 data centre in Melbourne, where delays to electricity network upgrades have pushed back the expected increase in power supply. NextDC said about A$140 million ($98 million) in contracted customer revenue expected during the current financial year would be deferred.

The corporation has also cut its sales and earnings projections for 2027. Its move comes as investors become increasingly concerned about the expenses and financial returns connected with the fast deployment of artificial intelligence technology.

NextDC Shares Fall as Melbourne Power Delays Hit Forecasts

NextDC now expects a net revenue of A$475 million to A$500 million in 2027, excluding the impacted M3 contracts. Its earlier expectation was between A$615 million and A$640 million.

The business also cut its expectation for underlying profits before interest, taxes, depreciation, and amortisation (EBITDA) from A$245 million to A$265 million. This compared to its previous estimate of A$385 million to A$410 million, both of which excluded the impacted contracts.

The delays are due to work being done by Jemena Electricity Networks, which is in charge of upgrading the M3 facility’s power supplies. According to NextDC, the increased supply is now projected in 2028.

Following protest from community residents and other stakeholders, Jemena has halted some of the essential network development. The corporation does not expect these activities to restart until February 2027.

During early trading, NextDC’s share price fell to its lowest level since January 18 and was the most heavily impacted company on Australia’s S&P/ASX 200 benchmark.

RBC Capital Markets analyst Tom Beadle said the delays highlighted the risks that community concerns and development approvals can create for data centre operators trying to deliver contracted capacity on schedule.

NextDC Suspends New Projects Amid AI Investment Concerns

Along with the altered financial prognosis, NextDC announced that all new development projects and land acquisitions would be put on hold for the foreseeable future. It will also consider options for capital recycling, such as the sale of specific development sites.

The company has decreased its capital expenditure plan for 2027 to between A$4.5 billion and A$5 billion. The prior range was A$5.25 billion to A$5.75 billion. NextDC has also begun a thorough evaluation of its expenditure program.

The statement comes as investors reconsider the costs of developing infrastructure to meet rising artificial intelligence demand. Data center operators have drawn significant investment based on the idea that AI will demand significantly more computing capacity and accompanying infrastructure.

However, worries have grown about the costs of computing equipment, land, and electricity, as well as whether future returns will justify the investment. Recent indicators of caution include the cancellation of a data center initial public offering in Australia the previous week, as well as more selective lending by credit investors to AI-related startups.

NextDC’s revised forecasts and pause on new developments reflect the immediate challenges created by delays at its Melbourne facility. The timing of electricity upgrades remains a key factor in when the company can deliver the affected contracted capacity and recognise the deferred revenue.