NextDC Shares Plunge 41.7% as Power Delays Force Revenue Cuts and Halt Expansion Plans

Australian data centre operator NextDC suffered a sharp stock market decline on October 21, 2026, after reducing its financial forecasts and suspending plans for new developments and land purchases. The company’s shares fell 41.7%, wiping approximately A$3 billion from its market value in the steepest single-day decline since its stock market listing in 2010.

The sell-off followed the company’s announcement that delays to electricity network upgrades at its major M3 data centre project in Melbourne would postpone contracted customer revenue worth approximately A98 million) during the current financial year.

NextDC said it would suspend all new development initiatives and land acquisitions for the foreseeable future. It also plans to examine opportunities to release capital tied up in its existing portfolio, including the possible sale of selected sites earmarked for development. The measures indicate a shift towards reviewing spending commitments and managing financial resources while infrastructure delivery remains uncertain.

The share price decline made NextDC the worst-performing stock in Australia’s broader ASX200 index on Wednesday. The benchmark index, by contrast, finished the session 0.16% higher. The scale of the company’s losses highlights investors’ concerns about the effect of infrastructure delays on expected revenue, earnings and future expansion.

NextDC has lowered its forecast net revenue for the 2027 financial year to between A500 million, compared with its previous estimate of A640 million. These revised figures exclude the contracts affected by the delays at the M3 facility.

The company also reduced its projected underlying earnings before interest, taxes, depreciation and amortisation, commonly known as EBITDA. Its updated estimate for 2027 stands at A265 million, down from the earlier range of A410 million, also excluding the affected M3 contracts.

The immediate difficulty centres on the availability of electricity needed to expand the Melbourne facility. NextDC said work by Jemena Electricity Networks had been delayed, pushing the anticipated next increase in power supply to the M3 data centre into 2028.

Access to electricity is essential for data centres because their computing equipment requires substantial and reliable power. Delays in securing additional capacity can prevent operators from bringing planned infrastructure online, even when customer contracts have already been agreed. For NextDC, the disruption means that some contracted capacity and the associated revenue will take longer to become available.

The Melbourne project’s expansion has encountered a further obstacle involving regulatory approvals. NextDC said approval timelines for its development plans had been affected by the Victorian state election scheduled for November 28, 2026.

Macquarie analysts said the combination of later electricity availability and approval delays could postpone the final stages of M3’s capacity expansion by several years. They also noted that NextDC had limited alternative options for obtaining the power required by the project.

Jemena has suspended parts of the electricity network work needed to increase supply to M3 following opposition from community members and other stakeholders. The company does not expect to restart the affected work before February 2027, adding further uncertainty to the project’s timetable.

The situation illustrates how community concerns can affect large infrastructure developments, particularly those requiring substantial electricity network upgrades. Tom Beadle, an analyst at RBC Capital Markets, said the delays to power supply and development approvals demonstrated that local opposition could pose a genuine risk to data centre operators attempting to deliver contracted capacity on schedule.

NextDC has also reduced its projected capital expenditure for 2027. The company now expects spending of between A5 billion, compared with its previous forecast of A5.75 billion.

Alongside the lower spending guidance, NextDC has begun a comprehensive examination of its investment programme. The company plans to present the initial findings at its annual investor meeting on November 20. Those findings could provide further information about how it intends to manage development commitments, prioritise projects and assess opportunities to free up capital.

The setback comes as investor enthusiasm for artificial intelligence infrastructure faces growing challenges. Data centres have attracted substantial investment because the expansion of AI systems requires more computing capacity, specialised equipment and electricity. However, rising land, construction and power costs have prompted investors to question whether the expected returns will justify the scale of spending.

Recent developments elsewhere have added to the uncertainty. An Australian data centre initial public offering was withdrawn the previous week, while credit investors have become more selective about companies with significant exposure to AI-related infrastructure.

South Korean AI company Elice offered another example of volatile investor sentiment. Its shares rebounded 30% on October 21 after dropping 32% on the first day of trading on October 20. The initial decline was the worst debut in Seoul for an IPO that raised more than $100 million.

These developments suggest that investors are becoming more cautious about valuations and growth expectations across parts of the technology sector. Businesses once supported by strong enthusiasm for AI are increasingly being assessed on their ability to deliver infrastructure, generate revenue and control spending.

For NextDC, the immediate priority is managing the consequences of delayed electricity supply while reassessing its investment plans. The company faces the challenge of meeting customer expectations despite obstacles outside its direct control, while also protecting its financial position.

The revised forecasts, reduced capital expenditure outlook and suspension of new developments mark a significant change in the company’s near-term strategy.