NextDC shares drop 44% after profit warning tied to Melbourne delay

In short: NextDC shares fell as much as 44% after the company warned profits would be lower because a key Melbourne project has been pushed back.

What's going on

NextDC, one of Australia’s biggest data centre operators, said work to upgrade the electricity supply for its M3 project in Melbourne has been delayed until 2027. A data centre is a large building full of computers that power online services, like a warehouse for the internet.

The company also said planning approvals have been pushed back until after next month’s state election. Because of these delays, NextDC cut its earnings forecast by more than a third and lowered its revenue outlook.

Investors reacted quickly. NextDC shares dropped as much as 44% to A$5.15, valuing the company at about A$4.3bn. The shares were above A$16 in early June.

This adds to signs of strain in the wider data centre and AI infrastructure sector in Australia. Firmus, a “neocloud” company (a newer type of cloud provider focused on renting computing power), recently pulled a planned A$44bn stock market listing. The Financial Times also reported that Firmus’s founder held talks with Nvidia this week about a possible capital injection of more than A$500mn after that listing failed.

Local pushback is a key part of the story. Jemena Electricity Networks said it paused a program to replace wooden power poles with tall concrete pylons in west Melbourne due to community resistance. NextDC’s chief executive Craig Scroggie said this means extra power for the M3 site is now expected in 2028, and the company is pausing some projects that do not have customer contracts.

What to watch

Watch whether planning and power upgrades speed up after the election, and whether other Australian data centre projects face similar community delays. Separately, any confirmed funding deal between Nvidia and Firmus could affect confidence in the sector.

Source: Financial Times