By Scott Murdoch and Rajasik Mukherjee
SYDNEY Oct 21 (Reuters) - Australian data centre operator NextDC shed nearly half of its market capitalisation on Wednesday after sharply cutting revenue forecasts for the year ahead and putting future developments on hold, extending the burst of negative sentiment towards global AI stocks.
The company said delays to electricity network upgrades at one of its major Melbourne assets would mean about A$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% and wiped about A$3.1 billion from its market value in early trade. The stock, now at its lowest since January 18, was also the biggest loser on the broader ASX200 benchmark index.
Investments for data centre 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Signs of strain are emerging in some of those bets, with a data centre IPO withdrawn in Australia last week and credit investors becoming increasingly selective toward AI-linked companies.
NextDC now expects net revenue of A$475 million to A$500 million in 2027, down from its prior outlook of A$615 million to A$640 million, excluding the affected M3 contracts.
The company also cut its 2027 underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) forecast to A$245 million to A$265 million, from A$385 million to A$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 centre 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 centre is evidence that community concerns around data centre developments present a real risk to the timing of delivery of contracted capacity for data centre owners," said Tom Beadle, RBC Capital Markets analyst.
Separately, NextDC lowered its 2027 capital expenditure outlook to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion and said it had begun a detailed review of its spending programme.
($1 = 1.4271 Australian dollars)
(Reporting by Scott Murdoch in Sydney and Rajasik Mukherjee; additional reporting by Shivangi Lahiri in Bengaluru; Editing by Diti Pujara and Stephen Coates)
