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NextDC shares plunge 40% after data center operator cuts earnings forecast on power delays

Community opposition stalls Melbourne facility expansion, pushing back infrastructure upgrades to February 2027

By LineZotpaper
Published
Updated
Read Time2 min
Sources7 outlets
Shares of Australian data center operator NextDC fell nearly 40% on Wednesday after the company slashed its fiscal 2027 earnings forecast, citing power supply delays at its Melbourne M3 facility due to community and stakeholder opposition.

NextDC shares closed 39.5% lower on Wednesday, the steepest decline in the company's history, after it revised down its revenue and earnings guidance for the current financial year.

The company now expects revenue of between A$475 million and A$500 million, down from the previously forecast A$615 million to A$640 million. Underlying EBITDA has been cut to A$245 million to A$265 million, compared with an earlier range of A$385 million to A$410 million.

The downgrade follows the suspension of infrastructure upgrades at the M3 Melbourne data centre, with electricity distributor Jemena not expecting to resume work before February 2027. Jemena cited safety concerns, restricted access to work sites due to community opposition, and a lack of consent from the local council pending further community consultation.

Citi analysts said in a note that the power delays could affect NextDC's earnings beyond fiscal 2027, pointing to approval delays for the M3 expansion and a longer-than-expected timeline for transformer upgrades.

The development comes as governments globally grapple with growing backlash against data centre developments over their impact on local communities and the environment. In Australia, Treasurer Jim Chalmers told CNBC that the government welcomes investment in data centres and AI infrastructure provided it aligns with the national interest, and that national investment standards are being finalised to address concerns.

NextDC shares have declined for seven consecutive weeks and are on course to end lower for the eighth.

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Analysis

Why This Matters

  • The earnings downgrade signals significant operational headwinds for one of Australia's largest data centre operators, affecting investor confidence in the sector.
  • Power supply delays highlight the growing friction between data centre expansion and local community concerns over infrastructure, noise and environmental impact.
  • The outcome may influence how regulators and governments approach data centre approval processes and national investment standards.

Background

Data centres have become critical infrastructure for cloud computing and AI workloads, but their rapid expansion has drawn increasing opposition from local communities and environmental groups. In Australia, the government has been working on national standards to manage data centre investment, balancing economic benefits with local impacts. NextDC's M3 facility in Melbourne is a key part of its capacity expansion plans.

Key Perspectives

NextDC: The company attributed the guidance cut to unavoidable delays beyond its control, with power infrastructure upgrades suspended by distributor Jemena due to local opposition and safety issues.

Jemena and local council: The electricity distributor cited safety concerns, restricted access and lack of council consent, requiring further community consultation before work can resume.

Treasurer Jim Chalmers (Australian government): Stated that data centre investment is welcome but must align with national interest, with final national standards being developed to address community concerns.

What to Watch

  • Whether Jemena's expected February 2027 timeline for resuming upgrades holds or faces further delays.
  • The outcome of local council and community consultations regarding the M3 expansion.
  • Completion and implementation of Australia's national investment standards for data centres, which could set precedents for future projects.

Sources

Checked

12 claims in this story checked against 1 source: 9 supported.

Show each claim
  1. SupportedNextDC shares fell about 40% after it cut its earnings forecast, citing power delays.Tech: “Shares of Australia's NextDC plunged 39.5% on Wednesday after the data center operator slashed its annual earnings forecast, citing power supply delays at its Melbourne facility amid local community and stakeholder opposition.”
  2. Partly supportedCommunity opposition stalled the Melbourne facility expansion, pushing infrastructure upgrades back to February 2027.Tech: “The delays to power stem from the suspension of infrastructure upgrades at the company's M3 Melbourne data center amid community opposition, with electricity distributor Jemena not expecting to resume work before February 2027, according to NextDC.”
  3. Partly supportedNextDC shares closed 39.5% lower on Wednesday.Tech: “Shares of Australia's NextDC plunged 39.5% on Wednesday”
  4. Not in the sourcesThe 39.5% decline was the steepest in NextDC's history.
  5. SupportedNextDC cut fiscal 2027 revenue guidance to A$475 million–A$500 million from A$615 million–A$640 million.Tech: “The company lowered its fiscal 2027 revenue guidance to between $475 million Australian dollars and A$500 million, from A$615 million to A$640 million forecast earlier”
  6. SupportedNextDC cut underlying EBITDA guidance to A$245 million–A$265 million from A$385 million–A$410 million.Tech: “while cutting its underlying earnings before interest, taxes, depreciation and amortization, or EBITDA, forecast to A$245 million to A$265 million from A$385 million to A$410 million.”
  7. SupportedJemena did not expect to resume infrastructure upgrade work before February 2027.Tech: “electricity distributor Jemena not expecting to resume work before February 2027, according to NextDC.”
  8. SupportedJemena cited safety concerns, restricted site access due to community opposition, and a lack of local-council consent pending further consultation.Tech: “Jemena cited safety concerns and restricted access to work sites due to community opposition, as well as a lack of consent from the local council pending further community consultation.”
  9. SupportedCiti said power delays could affect earnings beyond fiscal 2027, citing M3 approval delays and a longer-than-expected transformer-upgrade timeline.Tech: “Citi said in a note that NextDC's power delays could affect earnings beyond fiscal 2027, citing delays to approvals for the M3 expansion and a longer-than-expected timeline for transformer upgrades.”
  10. SupportedData-centre development is facing growing backlash worldwide over effects on local communities and the environment.Tech: “there has been growing push back against data center developments worldwide, amid concerns over their impact on local communities and the environment.”
  11. SupportedJim Chalmers told CNBC the government welcomes data-centre and AI-infrastructure investment if it aligns with the national interest, and is finalising national investment standards.Tech: “Chalmers told CNBC's " Squawk Box Asia " on Wednesday that the government welcomes investment in data centers and AI infrastructure, provided it aligns with the country's national interest, adding that the government was finalizing national investment standards to address concerns surrounding AI deployment.”
  12. SupportedNextDC shares had declined for seven straight weeks and were on course to end lower for an eighth.Tech: “NextDC shares have declined for seven straight weeks, and are on course to end lower for the eighth week.”

Zotpaper

Written by Harper Lane on the Business & markets desk. Claims checked by Ines Fairley, verification. Edited by Angus Burke, chief sub.

6 sources9 of 12 claims matched to a sourcefirst published
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