NextDC Shares Plunge 40% After Sharp Cut to Earnings Forecast

Shares of Australian data centre operator NextDC plunged more than 40% on October 21, 2026, after the company sharply reduced its financial outlook for the 2027 financial year. The downgrade followed delays to electricity network upgrades at its M3 data centre in Melbourne, pushing back the delivery of contracted capacity and expected revenue. The sell-off wiped approximately A$3.1 billion from the company’s market value, highlighting growing investor concerns about the challenges facing AI infrastructure investments.

Melbourne Power Delays Hit Financial Outlook

NextDC said delays to electricity network works by Jemena Electricity Networks would postpone the next increase in power supply to its M3 Melbourne facility until 2028. The upgrade is essential for expanding the centre’s capacity and supporting contracted customer demand.

Jemena suspended parts of the work amid community and stakeholder opposition, safety concerns and issues surrounding access and local council approval. The delays are expected to defer around A$140 million in contracted revenue and associated earnings during the current financial year.

The setback demonstrates how electricity availability and local planning decisions can affect the expansion of data centres, even as demand for computing infrastructure continues to grow.

Revenue and Earnings Forecasts Slashed

NextDC revised its financial guidance for the 2027 financial year, significantly lowering its revenue and underlying earnings expectations.

The company now expects net revenue of A$475 million to A$500 million, compared with its previous forecast of A$615 million to A$640 million. Its underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) forecast has been reduced to A$245 million–A$265 million from A$385 million–A$410 million.

NextDC also lowered its capital expenditure forecast to A$4.5 billion–A$5 billion, down from A$5.25 billion–A$5.75 billion. The company said it would review its spending programme and focus on projects serving contracted customer demand.

New Development Projects Put on Hold

In response to the delays and revised outlook, NextDC has placed new development projects and land acquisitions on hold for the foreseeable future. It will also assess opportunities to release capital, including potentially selling selected development sites that are not required in the near term.

The company said it remains in compliance with its financial covenants and reported liquidity of approximately A$8.675 billion as of September 30, 2026. However, it is assessing the potential financial implications of the delayed power supply, including contractual provisions that could lead to service-level credits or other consequences.

NextDC is continuing discussions with the affected customer and electricity provider to minimise the impact and determine when additional capacity can be delivered.

AI Infrastructure Boom Faces New Challenges

The sharp share-price decline comes amid strong global investment in data centres to support artificial intelligence, cloud computing and digital services. However, the sector is facing practical constraints, including rising infrastructure costs, electricity shortages, planning delays and growing community opposition.

For investors, NextDC’s setback highlights the risks of assuming that rising demand for AI computing will automatically translate into revenue growth. Data centre operators must also secure sufficient power, obtain approvals and deliver capacity on schedule to meet customer commitments.

The company’s future performance will depend partly on resolving the Melbourne project delays, managing capital spending and restoring confidence in its growth plans. The episode also raises broader questions about how quickly Australia can expand the infrastructure required to support the next phase of AI development.

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