Why is Megaport (ASX: MP1) up +15%?
Megaport (ASX: MP1) has upgraded its FY27 revenue and EBITDA margin guidance after securing new strategic AI infrastructure contracts, while also benefiting from earlier-than-expected execution of previously announced agreements. The stronger outlook demonstrates both incremental revenue from the new contracts and improving operating leverage as the business scales.
- MP1 is up ~85% YTD, demonstrating that not all tech stocks are enduring an annus horribilis in 2026.
The underlying numbers help explain the market’s enthusiasm. Network ARR rose 29% year-on-year to A$302.6m at 31 August on a constant-currency basis, while Compute continues to be the standout, with ARR surging 90% to A$201.4m by 22 September, up from A$105.9m at 30 June and more than tripling from A$61.6m when MP1 acquired Latitude.sh in November 2025.
- The acceleration highlights the growing contribution from AI infrastructure and cloud computing alongside continued strong growth in MP1’s core network business.
Importantly, despite the investment required in compute and storage hardware to support this growth, management says Megaport is fully funded for all capital expenditure included in its updated FY27 guidance, reducing concerns that rapid expansion could require additional equity funding. With both Network and Compute ARR growing strongly.
- MP1 is increasingly evolving from a pure network-connectivity business into a broader digital and AI infrastructure platform.
The acceleration in Compute highlights the growing contribution from Megaport’s push into AI infrastructure and cloud computing, complementing the strong underlying growth in its core network business. Importantly, despite the associated investment in compute and storage hardware, management reiterated that MP1 is fully funded for all capital expenditure included in its updated FY27 guidance, reducing the risk that its rapid expansion will require additional equity funding.
- We like MP1 moving into 2027 with the stock looking attractive ~$21-22.
