Australian data center operator NextDC's shares plunge 40% after it slashes earnings forecast

Key points

• NextDC shares fell 39.5% after the company cut its fiscal 2027 earnings forecast.
• Power upgrades at its M3 Melbourne data center are suspended amid community opposition.
• Distributor Jemena does not expect to resume work before February 2027.

Shares in Australian data center operator NextDC fell 39.5% on Wednesday after the company cut its annual earnings forecast, CNBC reported. The company blamed delays to power supply at its Melbourne facility, which it said stem from local community and stakeholder opposition.

NextDC lowered its fiscal 2027 revenue guidance to between A$475 million and A$500 million, down from A$615 million to A$640 million. It also cut its underlying EBITDA forecast to A$245 million to A$265 million from A$385 million to A$410 million.

Why the power was delayed

According to NextDC, the delays come from the suspension of infrastructure upgrades at its M3 Melbourne data center. Electricity distributor Jemena does not expect to resume work before February 2027.

Jemena cited safety concerns and restricted access to work sites due to community opposition, along with a lack of consent from the local council pending further community consultation. Citi said in a note that the power delays could affect earnings beyond fiscal 2027, pointing to delayed approvals for the M3 expansion and a longer-than-expected timeline for transformer upgrades.

the government welcomes investment in data centers and AI infrastructure, provided it aligns with the country's national interest

— Jim Chalmers

Government response and share slide

Treasurer Jim Chalmers told CNBC's "Squawk Box Asia" that the government welcomes investment in data centers and AI infrastructure if it aligns with the national interest. He said the government was finalizing national investment standards to address concerns around AI deployment.

NextDC shares have fallen for seven straight weeks and are on course to end lower for an eighth week. The article notes growing pushback against data center developments worldwide over concerns about their impact on local communities and the environment.