SYDNEY ─ Australian data center operator NextDC shed nearly half of its market capitalization on Wednesday after sharply cutting revenue forecasts for the year ahead and putting future developments on hold, extending the burst of negative sentiment toward global AI stocks.
The company said delays to electricity network upgrades at one of its major Melbourne assets would mean about AU$140 million ($98 million) worth of contracted customer revenue this financial year would be deferred.
It would shelve all new development projects and land acquisitions for the foreseeable future and would evaluate capital recycling opportunities, including potential sales of selected development sites.
The news sent NextDC shares down 44 percent and wiped about AU$3.1 billion from its market value in early trade. The stock, now at its lowest since Jan. 18, was also the biggest loser on the broader ASX200 benchmark index.
Investments for data center operators continue to pour in on expectations that surging demand for AI will drive a new wave of spending on digital infrastructure.
However, sentiment has weakened in recent weeks as investors question whether massive AI spending can justify soaring computing, land and power costs.
Signs of strain are emerging in some of those bets, with a data center IPO withdrawn in Australia last week and credit investors becoming increasingly selective toward AI-linked companies.
NextDC now expects net revenue of AU$475 million to AU$500 million in 2027, down from its prior outlook of AU$615 million to AU$640 million, excluding the affected M3 contracts.
The company also cut its 2027 underlying earnings before interest, taxes, depreciation and amortization (Ebitda) forecast to AU$245 million to AU$265 million, from AU$385 million to AU$410 million, excluding the affected M3 contracts.
Delays to works by Jemena Electricity Networks meant the next increase in supply to its M3 Melbourne data center was now expected in 2028, it said.
Jemena had suspended parts of the electricity network works needed to increase power supply to M3 due to opposition from the community and stakeholders and does not expect to recommence them before February 2027.
"Whilst out of the company's control, delays to power supply and development applications relating to NXT's M3 data center are evidence that community concerns around data center developments present a real risk to the timing of delivery of contracted capacity for data center owners," said Tom Beadle, RBC Capital Markets analyst.
Separately, NextDC lowered its 2027 capital expenditure outlook to AU$4.5 billion to AU$5 billion from AU$5.25 billion to AU$5.75 billion and said it had begun a detailed review of its spending program.
