NextDC, Australia's largest listed data-centre developer, watched its shares collapse by around 40% on Wednesday after it slashed fiscal 2027 earnings guidance and shelved every new development project. The Brisbane operator, which runs 17 data centres, blamed suspended electricity-network upgrades that left its flagship Melbourne M3 site short of power for contracted customer capacity. Reuters put the early-trade fall at 44%, wiping about A$3.1 billion off the company's market value in its worst day on record. AAP measured an early slide of 40.2% to A$5.48, a level not seen in eight years. The company had been counting on roughly A$140 million of contracted customer revenue from M3 this financial year — money it now concedes will not arrive on schedule.
The chain of events runs through Jemena Electricity Networks. The distributor halted the 66-kilovolt network works feeding M3 back in September — the job was upgrading poles across Yarraville and West Footscray to far bigger 66-kilovolt versions — citing safety worries, blocked site access and a council withholding consent pending consultation. Jemena has told NextDC it does not expect to restart before February 2027. Without the extra grid supply, the company cannot switch on the contracted capacity and bill for it; the next increase in supply is now pencilled in for the 2028 financial year. NextDC stripped the damaged M3 agreements from its 2026/27 outlook, cut yearly capex A$750 million to A$4.5–5.0 billion, and put near-term site sales under review.
The customers exist. The contracts are signed. The electricity is not.
Why it matters
This is the risk AI-infrastructure investors treated as theoretical for two years: the real cap on the data-centre build-out is not demand, it is the grid — and the council. Tom Beadle at RBC called it proof that community opposition is now a live timing risk for contracted capacity across data-centre owners. The timing could hardly be worse. Global AI names have wobbled for weeks on whether the spending justifies itself, and NextDC shares had already fallen seven weeks in a row before Wednesday, on course for an eighth straight weekly loss. Citi warned the delays could drag on earnings beyond fiscal 2027, citing slow M3 permits and a drawn-out transformer schedule. Treasurer Jim Chalmers told CNBC the government is now drawing up national investment standards for data centres — community pushback is starting to force policy, not just headlines. For traders watching the sector from our stocks desk, the takeaway is that contracted does not mean delivered — a theme echoed in this week's doubts around AI names and in Elice's bruising 33% debut crash in Korea, another data-centre story where the AI narrative met a colder market.
| FY27 guidance | Old range | New range | Change at midpoint |
|---|---|---|---|
| Net revenue | A$615–640m | A$475–500m | about −22% |
| Underlying EBITDA | A$385–410m | A$245–265m | about −36% |
| Capital expenditure | A$5.25–5.75bn | A$4.50–5.00bn | −A$750m |
Ranges exclude the hit M3 contracts. Midpoint math is ours: revenue −A$140m off a A$627.5m midpoint, EBITDA −A$142.5m off A$397.5m — operating leverage in reverse. The A$3.1b wiped on a 44% fall implies roughly a A$7b valuation before Wednesday's open.
What to watch
- Whether Jemena restarts the M3 works in February 2027 or slips further — that date anchors any recovery in billed capacity.
- Canberra's national investment standards: whatever the framework says about power and community consent will shape every future Australian build.
- Liquidity: A$8.68 billion at 30 September, though the M3 delay could crimp NextDC's ability to draw A$6.7 billion of undrawn senior debt.
MarketRadar take
The market is pricing two separate risks: the lost year of M3 revenue, and the chance the business model — fund aggressive builds assuming power arrives on schedule — no longer holds. EBITDA was cut roughly 36% against a 22% revenue cut, so every delayed megawatt lands harder on the bottom line. For AI-infrastructure names, the lesson from Sydney is that due diligence now starts at the substation, not the server hall. We stay cautious on the sector's contracted-growth stories until grid timelines stop slipping.
