NXT is Australia’s largest pure-play data-centre operator and developer listed on the ASX. The stock popped +6.6% on Monday after announcing that additional contract wins have lifted its pro forma contracted utilisation by 30% since the 1st of the month. The company’s order book has grown steadily, although FY26 guidance for net revenue and earnings (EBITDA) remains unchanged. The stock enjoyed a “first player” advantage over the last decade, but the last l2-18 months have been a tougher time, even as AI workload gathers momentum.
NXT has largely been weighed down by valuation contraction as euphoria has left the DC space – this is now an $8bn business that’s expected to generate revenue of close to $500mn in 2026, not too scary compared to many in the high growth tech sector. Although the company has delivered growing revenue and strong underlying earnings metrics, it still reports a net loss as it invests aggressively for the future. Overall, NXT shares have fallen due to the aggressive rotation out of growth/tech stocks, concerns around profitability and capital intensity, despite underlying demand trends and strong long-term contracts. Such sentiment can turn quickly, especially if the RBA doesn’t hike rates in 2026, but at this stage, pre-empting such a move has proved costly.
Competitive risks come from large international incumbents such as Equinix and other global operators that have bigger scale, deeper pockets, and broader geographic reach. Also, growing regional rivals, hyperscale cloud platforms building their own infrastructure, and overall capacity growth could intensify price competition. The next chapter in DCs is likely still to show its hand, and even as NXT generates the vast majority of its revenue from colocation services, its outlook is hard to map out.
- We are concerned that NXT could get lost as the big players build huge numbers of DCs, rapidly increasing competition, plus it’s likely to be expensive to keep ahead of new technology.
MM is neutral towards NXT
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