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NextDC Plunges More Than 40 Percent as Community Opposition Cuts Power to a Flagship Data Center

Business · By: AIReport Admin · 2 hours ago · 👁 8
NextDC Plunges More Than 40 Percent as Community Opposition Cuts Power to a Flagship Data Center

NextDC shares fell as much as 44 percent in Sydney on Wednesday after the operator slashed fiscal 2027 EBITDA guidance to 245-265 Million Australian Dollars from 385-410 Million and revenue guidance to 475-500 Million from 615-640 Million. Power distributor Jemena paused connection work at the Melbourne M3 site after community opposition, with work not resuming before February 2027. The company is weighing force majeure.

NextDC, Australia's largest homegrown data center operator, lost more than 40 percent of its market value on Wednesday — falling as much as 44 percent in early Sydney trading — after it gutted its fiscal 2027 guidance over a power connection it may not get until late in the decade. The crash is the sharpest sign yet that the binding constraint on the AI buildout is shifting from chips and capital to electricity and community consent.

The numbers are brutal. NextDC cut its FY2027 underlying EBITDA guidance to between 245 and 265 Million Australian Dollars, from 385 to 410 Million previously — a cut of roughly a third. Revenue guidance fell to 475 to 500 Million Australian Dollars from 615 to 640 Million. The company had already closed down seven consecutive weeks of losses before Wednesday's move, which put the stock on course for an eighth.

The trigger is the M3 project in Melbourne. According to the company's statement, local community and stakeholder opposition led power distributor Jemena Electricity Networks to pause connection work at the site, citing safety concerns, restricted site access, and the absence of local government approval ahead of further community consultation. Jemena does not expect construction to resume before February 2027 — and the delay ripples straight through the revenue ramp the guidance assumed.

NextDC's response is escalation, not accommodation. The company said it is assessing force majeure options and has paused all new development projects and land acquisitions while it reviews its capital expenditure plans. Citi analysts flagged that the approval delay and a longer-than-expected transformer upgrade timeline could weigh on earnings beyond FY2027 as well.

The politics arrived the same day. Australian Treasurer Jim Chalmers said the government welcomes data center and AI infrastructure investment, but only where it serves the national interest — and revealed that Canberra is finalizing a set of national investment standards to respond to exactly the sort of local friction now paralyzing M3.

The deeper worry is the funding model. NextDC spent about 3.4 Billion Australian Dollars in capital expenditure in FY2026 against revenue of roughly 497 Million — a gap bridged by debt on the assumption that completed capacity converts into tenant contracts on schedule. Morgan Stanley estimates global spending on AI data centers and chips will reach 2.9 Trillion Dollars by 2028, with about 1.5 Trillion of it needing external financing. Estimates cited in Australian financial press — from regulatory data firm RegLayer and asset manager AllianceBernstein — suggest a large share of announced projects will never be built at all.

For the AI infrastructure trade, NextDC is the case study investors have been waiting for: a solvent, profitable, market-leading operator that did everything right on demand and still lost a third of its earnings outlook to a paused substation. Grid queues, transformer lead times and town-hall meetings are now underwriting variables — and they reprice faster than any GPU.

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