NextDC shares drop 40% after earnings forecast cut

Shares of Australian data centre operator NextDC fell 39.5% after announcing a lower earnings forecast due to power supply delays.The company revised its fiscal 2027 revenue forecast to between $475 million and A$500 million, down from A$615 million to A$640 million, and cut its EBITDA prediction to A$245 million to A$265 million from A$385 million to A$410 million.

NextDC earnings warning

Power delays are linked to a halt in upgrades at the M3 Melbourne data centre, facing community opposition.

Electricity distributor Jemena expects work to resume by February 2027 due to safety concerns and lack of council approval.

Citi analysts indicated that power delays may impact earnings beyond fiscal 2027, citing a lengthy approval process for M3 expansion.

Treasurer Jim Chalmers stated that Australia is establishing national standards for data centre investments to address community concerns.

Chalmers welcomed investment in data centres and AI infrastructure, provided they serve national interests.

Global opposition to data centre developments is increasing, driven by environmental and community impact concerns.

NextDC’s shares have declined for seven consecutive weeks, poised to decrease again this week.

The situation reflects broader challenges in balancing technological investment with local community needs.

Regulatory frameworks are being scrutinised as Australia navigates this complex landscape.