NEXTDC Limited (NXT) – Data Deals Flow

NextDC (NXT) announced that contract wins had boosted contracted utilisation of its centres to 316 megawatts (MW), up 71MW, or 29%, since 30 June. Ord Minnett notes NextDC had only guided to 50–100MW of contract wins for FY26, so the latest announcement, along with industry feedback highlighting strong demand from both western and eastern hyperscalers, bodes well for the full-year outcome.

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The company also guided to capital expenditure in FY26 of $2.2–2.4 billion, an increase of $400 million, to deliver on new customer contracts. Our forecast is for $2.6 billion, a rise of $100 million, albeit our model factors in some land acquisition costs in its Asian operations. We have left our FY26 operating earnings (EBITDA) estimate unchanged, while our FY27 and FY28 forecasts are raised by 2% and 7%, respectively, to incorporate these and prospective contract wins in the near term.

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Ord Minnett also sees upside from the agreement between NextDC (NXT) and Open AI, whose ChatGPT product is the most popular of the artificial intelligence apps, to collaborate on the development and operation of the Australian company’s S7 data centre site at Eastern Creek in Sydney’s west where it plans to build a hyperscale AI campus and a large ‘supercluster’ of GPUs (graphics processing units).

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We have raised our target price on NextDC to $20.50 from $19.00 to incorporate our assumed value of the agreement with Open AI, although we have not yet changed our earnings estimates due to the lack of detail and operational timelines. We reiterate our Buy recommendation.

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