Australia's Megaport rallies after bagging $687-million AI contracts

Sept 29 — Australian network and cloud services ​provider Megaport said on Tuesday it won three AI infrastructure contracts worth about A$978.6 million ($686.88 million) and raised its ‌annual earnings forecast, sending its shares nearly 21% higher.

The new deals highlight Megaport's transformation into ⁠an AI infrastructure provider following ​its acquisition of Latitude.sh, as rising ⁠demand for graphics processing unit (GPU) computing fuels long-term technology spending.

The ‌contracts, signed through Latitude.sh, ‌are expected to add A$232.4 million in annual recurring ⁠revenue (ARR) once fully deployed.

The deals lift ⁠pro forma group ARR to about A$1.1 billion and bring the total value of strategic AI infrastructure contracts announced since April to roughly A$2.3 billion, including four similar deals worth A$458.9 million secured in early June.

"The test is now execution: installing the ‌equipment on time, converting contracted value into revenue, ​and earning an adequate return on a much larger capital base," said Mark Gardner, founder and CEO of MPC Markets.

"Nearly a billion dollars of contract value is impressive. It is not a billion dollars of revenue today."

Shares of Megaport rose as much as 20.5% to A$22.720, their highest since August 13, while the ​benchmark stock index was up 0.2%.

Megaport, which uses Nvidia and AMD ‌chips and operates across more ‌than ⁠1,100 data centres in 31 countries, also lifted its 2027 revenue forecast to A$720 million-A$810 million from A$620 million-A$730 million.

It also lifted its FY27 capital expenditure forecast to A$1.78 billion-A$1.88 billion from A$1.28 billion-A$1.38 ‌billion to support the ​new contracts and replenish its GPU pool.

($1 = ‌1.4247 Australian dollars)

(Reporting ⁠by Rajasik Mukherjee & ​Jasmeen Ara Shaikh in Bengaluru; Editing by Perla Velasco, Sherry Jacob-Phillips and ​Subhranshu Sahu)

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