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Fund Manager Summary on Nextdc Ltd (ASX:NXT)
In March 2026, Pendal Group commented that NextDC beat earnings, lifted capex guidance after recent contract wins and a larger pipeline, and is pursuing joint‑venture and subordinated‑note funding to avoid dilutive equity raises. Nextdc Ltd (ASX:NXT) is broadly viewed by managers as well positioned to benefit from structural tailwinds in cloud and AI-driven demand—evidence cited includes sizeable increases in contracted utilisation (reported rises to around 244MW and later 316MW, with discrete wins including 71MW and incremental domestic and KL1 awards)—but the consensus is mixed as investors weigh these growth dynamics against persistent risks: high capital intensity with long-dated returns, periodic equity issuance history, funding needs during the build phase, limited pricing power when dealing with hyperscalers, and operational/permitting and counterparty risks; actionable takeaways are to monitor billing ramp and conversion of contracted MW into revenue, management’s use of JV and non-dilutive funding to limit future equity raises, the pace of further contract wins and international validation, and any changes to capex guidance or utilisation curves which will be the key catalysts for re-rating or downside if funding or execution falters.
Commentary From The Managers
There are 27 insights from 12 fund managers regarding their investment in Nextdc Ltd (ASX:NXT) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Pendal Group
2 Mar 2026
$13.35
Summary
- Pendal Group believes NextDC’s recent earnings beat, the upgraded FY28+ billing curve and a materially larger pipeline point to strong growth ahead, and continues to hold because the stock trades at ~16.5x contracted EBITDA, offering compelling value relative to peers despite near‑term funding complexity.
- Earnings beat and capex guidance: NXT beat expectations and has raised capex guidance further following recent contract wins and a robust pipeline of opportunities.
- Upgraded forward billing: Management’s updated billing curve drove ~10% upgrades for FY28+.
- Pipeline and share wins: The pipeline is larger than the market anticipated and NXT is successfully winning its share of new contracts.
- Capex funding need: Each contract win requires incremental capex that must be funded during the build stage.
- Equity-raising reluctance: Management is determined to avoid returning to the equity market at current levels and is pursuing alternative funding routes.
- Interim funding strategy: Barrenjoey has been appointed to run a JV and interim funding strategy; a subordinated note offering is commencing next week.
- Valuation context: NXT trades at ~16.5x contracted EBITDA versus the AirTrunk acquisition multiple of 24x, indicating relative valuation upside while the market assesses the funding structure.
- Peer performance: Both NextDC and Goodman Group have underperformed US data‑centre peers, reinforcing the view that market apprehension about funding and build risks is weighing on multiples.
- Investment view: Good value on offer given visible contracted cashflows, upgraded billing profile and a large pipeline, with near‑term funding execution being the primary risk to monitor.
Wilson Asset Management
30 Jan 2026
$13.32
Summary
- Wilson Asset Management believes NEXTDC is materially undervalued and continues to hold because contracted capacity and forward cashflows imply an ~15x EBITDA valuation, suggesting the market is not pricing expected growth.
- Scorched-earth valuation — current market pricing effectively assumes no additional contract wins or growth beyond what is already contracted.
- Contracted capacity is the primary valuation anchor; scaling out a few years shows valuation around the 15x EBITDA level we view as appropriate.
- Recent wins — NEXTDC announced close to 100 megawatts in December, which supports future revenue and utilisation uplift.
- Capacity build-out — a couple of new assets are coming online, providing near-term growth and de-risking revenue forecasts.
- Market sentiment has rotated: NEXTDC was previously a market darling and is now overlooked, creating a buying opportunity from our perspective.
- We consider there to be potential strategic upside, including the possibility of a takeover scenario given the valuation gap.
- Overall view: NEXTDC represents a compelling opportunity based on contracted economics, recent capacity wins, and the market’s failure to fully price future growth.
Firetrail Investments
30 Jan 2026
$13.32
Summary
- Firetrail Investments believes Nextdc is effectively a real estate business and has reduced their position because the return on capital remains unproven and rising industry risks make the risk/reward unattractive, so for us it is a sell.
- Real estate analogy: Nextdc functions as a developer and long‑term owner of data centres, meaning heavy upfront capital, development execution and long payback horizons.
- Quality concerns: We see a number of structural worries about the industry that impair predictability and returns.
- Counterparty risk: Tenant creditworthiness and customer concentration create meaningful cashflow and earnings risk to owners.
- Permitting and delivery delays: Ongoing approvals and construction hold‑ups extend timelines and elevate cost and execution risk.
- Resource and regulatory pressure: Emerging constraints on water usage (noted in California and Australia) and tougher environmental scrutiny are increasing operating and compliance costs.
- Rising barriers to entry: Higher regulatory and resource hurdles are making development harder and reducing visibility on future returns.
- Market reaction vs fundamentals: Although the share price has retraced, the fundamental question of sustainable return on capital remains unanswered for Firetrail.
- Positioning: Given these considerations, Firetrail has reduced exposure and prefers to de‑risk rather than maintain the prior weighting.
Yarra Capital Management
31 Dec 2025
$12.53
Summary
- Yarra Capital Management continues to hold Nextdc Ltd as an overweight position, viewing concerns about an AI data centre bubble as overblown for NXT specifically.
- NextDC underperformed as global data centre peers sold off on fears of an AI investment bubble.
- Yarra believes NXT is well protected from these concerns, with high earnings certainty underpinned by long-term contracted revenue for the next three years.
- The contracted backlog distinguishes NXT from more speculative AI infrastructure names that drove the broader sector selloff.
Pendal Group
8 Dec 2025
$14.15
Summary
- Pendal Group notes that NextDC (NXT) has secured new contract wins totaling 71MW, increasing total capacity by 29% to 316MW across various customers and sites.
- The majority of this capacity is expected to be installed by the end of FY27, contributing to earnings in FY28.
- Consensus EBITDA forecasts have been revised upwards by approximately 5%, although Pendal Group believes the actual upgrades could be closer to 10% or more.
- NextDC has entered a memorandum of understanding with OpenAI for the development of the S7 project, a 650MW facility in Eastern Creek, Western Sydney.
- The S7 project is expected to be expedited through the new NSW government’s Investment Delivery Authority (IDA) process, benefiting from good access to power.
- NXT aims to deliver phase one of the S7 project to market in 2H 2027, which is significantly earlier than market expectations.
- Alongside the S4 project, this 1GW+ portfolio is set to advance further through the joint venture process, with NXT planning to vend in land valued at approximately $500 million and partner with a long-term investor.
Yarra Capital Management
30 Nov 2025
$13.72
Summary
- Yarra Capital Management believes NextDC is well positioned and continues to hold because the recent sell‑off in global peers and AI‑chain fears have lowered the share price while earnings visibility, strategic assets and a strong balance sheet provide protection.
- Leading Australian data centre owner and developer—scale and market position support long‑term demand.
- High earnings certainty for the next 3 years underpinned by contracted revenue streams.
- Strategic locations that attract enterprise and hyperscaler customers, supporting occupancy and pricing resilience.
- Co‑location business model delivers recurring, contracted revenues and lower revenue volatility.
- Strong balance sheet enables funding of the development pipeline and provides flexibility through market dislocations.
- Valuation trading at ~17× contracted revenue is viewed as an attractive entry point after the pullback; position rated overweight.
SG Hiscock & Company
30 Nov 2025
$13.72
Summary
- SG Hiscock & Company notes that technology stocks faced pressure, contributing to NextDC's underperformance of -13.9%.
- The decline is attributed to a mix of rising bond yields and concerns over tech valuations following a strong performance.
- There is a growing cautiousness regarding AI capital expenditures and their returns, impacting market sentiment.
- Despite these challenges, SG Hiscock & Company observes that there is little new information affecting the earnings outlook for NextDC.
Yarra Capital Management
31 Oct 2025
$15.76
Summary
- Yarra Capital Management maintains an overweight position in NEXTDC (NXT).
- NXT, a leading Australian data centre owner and developer, experienced underperformance in October after a strong prior month.
- Global caution is rising regarding the sustainability of AI-driven data centre demand growth, impacting NXT’s share price.
- The medium-term growth of NXT is supported by committed contracts from major hyperscalers.
- At current share price levels, Yarra Capital Management believes there is limited value beyond these existing commitments.
Pendal Group
3 Oct 2025
$16.94
Summary
- Pendal Group continues to hold on to Nextdc Ltd due to its divisive nature.
- The CEO views himself as a key player, though perceptions of his effectiveness vary.
- The demand for Nextdc's products is described as accelerating and significant.
- Customers face binary risks that necessitate their products.
- Monetising the demand poses challenges due to the capital-intensive nature of the business.
- The primary risk of not owning the stock is its strategic positioning as a high-quality player with a strong land bank.
- There is a reasonable potential for acquisition given its quality in the mid-cap space.
- Challenges include lack of pricing power and competition with larger players.
- Long-dated returns and high capital intensity are significant concerns.
- Frequent market tapping has affected share price negatively.
- Overall, the thesis balances outsized demand against the challenges of capital intensity and return timelines.
Blackwattle Investment Partners
3 Oct 2025
$16.94
Summary
- Blackwattle Investment Partners sold their investment in NXT due to concerns about the business model's effectiveness.
- Despite the high demand for data centres, particularly driven by AI, the returns do not meet expectations.
- There is a discrepancy between EBITDA growth and asset growth, with assets increasing faster due to capital raises.
- The fund struggles with the compensation for capital deployment, as growth is outpacing returns.
- Older data centre cohorts are yielding modest returns, raising further concerns.
- Customers include major hyperscalers like Amazon and Microsoft, who tend to negotiate for lower prices.
- There is a perceived risk that anticipated returns may not materialize for investors.
- Blackwattle believes there are better alternatives in the market for playmaker-type stocks.
Oracle Advisory Group
30 Sept 2025
$16.92
Summary
- NextDC Limited is a core holding of the portfolio.
- The company is not included in the index.
- In August, NextDC's share price rose approximately 13.7% following a strong FY2025 results announcement.
- Revenue increased by 14% to $350 million, driven by demand for cloud and AI infrastructure.
- EBITDA grew 6% to $217 million.
- Contracted utilisation increased by a significant 43%.
- NextDC's strategic expansion includes new data centre developments in Sydney, Melbourne, and Tokyo.
- The company has a robust balance sheet with $1.2 billion in liquidity supporting growth initiatives.
- Market enthusiasm is fueled by NextDC’s exposure to the AI and digital infrastructure boom.
- NextDC is positioned as a key beneficiary of the structural tailwinds in the broader data centre market.
Paradice Investment Management
30 Sept 2025
$16.92
Summary
- Paradice Investment Management re-initiated a position in Nextdc Ltd (NXT).
- Investment driven by strong demand momentum.
- Strategic shift towards partnership-based funding.
- Reduction in the need for dilutive capital raisings.
Pendal Group
31 Aug 2025
$16.73
Summary
- Pendal Group notes that data centre company NXT met expectations for its FY25 result and FY26 guidance.
- Management’s earnings guidance for FY27 is at least 15% above consensus, with potential for further upside from incremental contract wins.
- They have taken the risk of an equity raise off the table unless material new contracts that require more support are won.
- A joint venture structure has been introduced for future developments.
- Pendal Group highlights a step-change in capital allocation and returns approach by management.
- The CEO's extremely bullish results call emphasized a very large opportunity set ahead for the company.
Wilson Asset Management
31 Aug 2025
$16.73
Summary
- NEXTDC is a leading Australian technology company providing essential infrastructure for the digital economy.
- It delivers secure, high-capacity power and connectivity for global cloud providers, enterprises, and government clients.
- NEXTDC achieved a solid FY2025 result, supported by strong contracted utilisation.
- There is a reduction in funding concerns due to a clear outline of debt capacity and a shift towards a more capital-light model.
- Billing utilisation is ramping faster than anticipated, indicating potential upgrades to consensus forecasts.
- Wilson Asset Management established its position in NEXTDC earlier this year when the stock was oversold on AI demand concerns and equity raising.
- Recent developments have materially strengthened the outlook for NEXTDC.
- New joint ventures and debt funding have reduced equity issuance risk.
- There is sustained demand for AI and cloud infrastructure, positioning NEXTDC as a critical enabler in the digital economy.
- Wilson Asset Management continues to hold because of further opportunities for major contract wins and long-term earnings growth.
Equity Trustees Asset Management
30 June 2025
$14.50
Summary
- NEXTDC is a Data-Centre-as-a-Service provider catering to corporate, government, and IT services sectors.
- Equity Trustees Asset Management notes a strong rebound in stock performance following a weak March quarter.
- The stock experienced aggressive selling, creating a value opportunity that was capitalized on.
- Concerns regarding a slowdown in data centre spending were alleviated, supported by positive industry feedback.
- Company results indicated strong ongoing investment in AI and cloud services, which drive demand for data centre capacity.
- During the quarter, NXT achieved significant contract wins, including offshore opportunities.
- Contracted utilisation has increased significantly, indicating positive momentum.
Yarra Capital Management
30 June 2025
$14.50
Summary
- NextDC (NXT) has outperformed during the period, showcasing strong market performance.
- Record growth in contracted utilisation has been a significant driver of this performance.
- A notable surge in AI-related customer wins has contributed to the positive outlook.
- During the quarter, contracted capacity increased by 68MW to a total of 244MW, reflecting a 39% growth.
- This growth was primarily driven by an AI-focused hyperscale contract win in Melbourne.
- A smaller hyperscale win was also noted in the new Kuala Lumpur (KL1) facility.
- Yarra Capital Management continues to hold an overweight position in NextDC, reflecting confidence in its growth trajectory.
DS Capital
30 June 2025
$14.50
Summary
- DS Capital notes an 18% decline in NEXTDC's share price following strong performance over the past two years, amid sector consolidation.
- Concerns about DeepSeek, a Chinese startup, have emerged regarding its cost advantages and potential impact on data centre demand.
- Debate exists around the accuracy of DeepSeek's claims and the implications for AI adoption and demand.
- Customers appear to be pausing on new data centre capacity commitments, likely due to timing rather than reduced demand.
- NEXTDC achieved significant operational success, securing 52MW of domestic contract wins in Q3 and a 10MW contract in Malaysia, validating offshore ambitions.
- As one of the sector’s most experienced operators, NEXTDC has shown its capability in delivering complex projects.
- Access to land and power remains a critical barrier to entry, providing NEXTDC with a lasting competitive advantage.
- This competitive edge is expected to be monetised, generating strong cash flow and returns in the medium term.
- Looking ahead, DS Capital anticipates NEXTDC will benefit from ongoing digitization, cloud computing adoption, and the growth of early-stage AI applications.
Pendal Group
30 June 2025
$14.50
Summary
- Pendal Group remains overweight on NextDC (NXT, +10.6%).
- NextDC has reported a 7% increase in their order book for the KL1 data centre in Kuala Lumpur, along with facilities in Melbourne and Sydney.
- This marks NextDC's first international contract award.
- The contract implies 15% utilisation for KL1 before its completion.
- The ramp-up from this contract is expected to be quick, achieving full run-rate by FY28.
- This growth is likely to drive upgrades to consensus numbers.
- Pendal Group believes the pipeline remains strong, and further contract wins could enhance stock sentiment.
Oracle Advisory Group
30 June 2025
$14.50
Summary
- Oracle Advisory Group updates its investment thesis on NextDC Ltd.
- NextDC's pro forma contracted utilisation increased by 52 MW (30%) to 228 MW since 31st December 2024.
- The increase was driven by large AI deployments at its Victorian data centres.
- As of 31st March 2025, contracted utilisation at these centres is 114 MW.
- The pro forma order book has risen by 45 MW to a total of 127 MW.
- In June, NextDC announced a further increase in contracted utilisation by 16 MW to 244 MW.
- This increase includes 10 MW at its facilities in Kuala Lumpur, Malaysia.
- Oracle Advisory Group continues to hold its position based on these positive developments.
Pengana Capital Group
28 Apr 2025
$11.40
Summary
- Pengana Capital Group had a top holding in Nextdc Ltd for 2023.
- Position was reduced due to high valuation.
- Concerns over reduced AI/data center capex by Microsoft influenced the decision.
Clime Investment Management
31 Mar 2025
$11.31
Summary
- Clime Investment Management exited their investment in NXT during the month.
- The decision followed a review of the investment case, which was deemed underwhelming.
- NXT had been a good performer in its early years.
- The company continues to grow at a strong rate.
- However, valuation was considered excessive relative to peers.
- There are challenged data centre economics due to an ongoing mix shift.
- Management incentives were found to be misaligned.
Yarra Capital Management
31 Mar 2025
$11.31
Summary
- NextDC (NXT) is currently underweight due to recent performance issues.
- Market impatience has grown regarding the announcement of large contract wins.
- Concerns have arisen about DeepSeek’s efficient AI training models affecting future global data centre demand.
- Yarra Capital Management continues to favour NXT due to its strong footprint and delivery track record.
- The company is expected to benefit from long-term structural earnings growth.
- This growth is driven by the adoption of cloud and artificial intelligence capabilities.
- NXT maintains solid returns on capital.
Oracle Advisory Group
31 Mar 2025
$11.31
Summary
- Oracle Advisory Group continues to hold their position in NextDC (NXT) as the stock approaches 1-year lows.
- The stock weakness is attributed to capital raising in September and the DeepSeek news earlier this year, compounded by broader tech sell-off.
- Despite potential impacts on some chip makers from DeepSeek, Oracle does not foresee severe consequences for data centre growth.
- Historically, reduced technology costs have led to significant increases in use cases.
- Lowered chip prices are expected to drive a surge in inference AI demand, boosting requirements for hyperscalers and data centres.
- NextDC has secured contracted revenue for many years, reducing the risk of slowdown.
- Market concerns relate to tariff wars affecting global capital expenditure of hyperscalers, despite NextDC not being directly impacted.
- Oracle views the business model of NXT as solid, with contracted revenues projected to ramp up significantly over the next couple of years.
- Continued AI demand and cheaper technology are expected to contribute to an increase in NextDC’s valuation.
- The limited availability of land for new data centres suggests reduced competition for NextDC going forward.
Yarra Capital Management
31 Jan 2025
$14.85
Summary
- NEXTDC (NXT, overweight) – the data centre owner and developer has shown modest underperformance during the period.
- Limited company specific news has contributed to this underperformance.
- Yarra Capital Management continues to favour NXT due to its strong market position.
- The company has built an envied footprint in the data centre sector.
- NXT has a track record of delivery that supports its growth potential.
- Yarra believes NXT will benefit from long-term structural earnings growth.
- This growth is driven by adoption of cloud and artificial intelligence capabilities.
- NXT is anticipated to achieve solid returns on capital.
Oracle Advisory Group
30 Sept 2024
$17.50
Summary
- Oracle Advisory Group took a new position in NextDC during the month.
- NextDC is viewed as a real estate play focused on buying land and constructing data centres.
- The company earns revenue by renting out "racks" for servers used to store and process data.
- NextDC is experiencing a step change in revenues that began in the second half of FY23.
- They have a strong forward order book of 68.8 megawatts, which could nearly double revenues over the next three years.
- There is potential for further upside, as AI demand is expected to be 3-5 times that of current cloud demand.
- NextDC continues to see strong growth from existing cloud customers and emerging AI demand.
- Oracle Advisory Group has taken a long-term view when valuing NextDC.
- At the current share price, there is still significant upside to the investment.
Clime Investment Management
31 July 2024
$16.75
Summary
- NXT is Australia's largest independent data centre operator.
- Leverages structural demand megatrends in Cloud Computing and Generative Artificial Intelligence.
- Operates in an attractive industry structure with high barriers to entry.
- Possesses pricing power due to scale and strategic asset locations.
- Clime Investment Management initiated a position in NXT based on its ability to capture demand in APAC markets.
- Significant forward contract order book and development pipeline provide medium-term earnings visibility.
- Improving return and risk profile supports the investment thesis.
Yarra Capital Management
31 July 2024
$16.75
Summary
- Yarra Capital Management continues to hold an overweight position in NEXTDC (NXT)
- NXT underperformed recently, reflecting a broader selloff in US tech stocks
- This selloff is linked to skepticism regarding the pace of artificial intelligence adoption
- NXT is favored due to its unique structural long-term earnings growth
- Growth is driven by the adoption of cloud and artificial intelligence technologies
- The company features infrastructure-like characteristics
- It provides solid returns on capital supported by a tangible asset base
Yarra Capital Management
30 June 2024
$17.49
Summary
- NEXTDC (NXT, overweight) – currently viewed positively by Yarra Capital Management.
- Strong performance – outperformed during the period, reversing previous month’s underperformance.
- Focus on long-term outlook – market is emphasizing the company's robust future prospects.
- Leading position – NXT is Australia’s premier co-location data centre provider.
- Surging demand – well-positioned to benefit from increased demand for data centre capacity.
- Drivers of demand – public to private cloud switching, growing data usage, and advancements in artificial intelligence.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Nextdc Ltd (ASX:NXT)?
Fund managers including Oracle Advisory Group, Yarra Capital Management, Pengana Capital Group, Pendal Group, Clime Investment Management, DS Capital, Equity Trustees Asset Management, Wilson Asset Management, Blackwattle Investment Partners, Paradice Investment Management, SG Hiscock & Company and Firetrail Investments have invested in Nextdc Ltd (ASX:NXT).
Why do fund managers invest in Nextdc Ltd?
Fund managers invest in NextDC Ltd due to its strong position in the growing data centre sector, particularly as demand surges from AI and cloud computing. The company has secured significant contracted revenues, ensuring stable cash flow. Despite recent market fluctuations, its strategic expansion and historical performance support potential for long-term growth. Furthermore, limited competition for land and infrastructure reinforces its risk/reward profile, providing a solid foundation for future earnings growth.
What happened to Nextdc Ltd (ASX:NXT)?
Fund managers express mixed views on Nextdc Ltd, reflecting its potential and challenges. While there is strong demand for data centers driven by AI, concerns about return on investment persist due to high capital intensity and modest yield performance. Some see value in Nextdc's strategic location and recent contract wins, which support growth, despite fears of competitive pressure from larger players. Overall, while the company benefits from a booming market, the risks associated with pricing power and capital deployment raise caution among investors.
What is the short interest in Nextdc Ltd (ASX:NXT)?
The short interest in Nextdc Ltd (ASX:NXT) is 5.90% which makes it the 32nd most shorted stock on the ASX. Of the 640.9M shares that Nextdc Ltd has on issue, 37.8M have been sold short.
What does Nextdc Ltd (ASX:NXT) do?
NextDC Ltd. engages in the operation and development of data centers. It operates through the following segments: Vic, NSW/ACT, Rest of Australia, International, and Other. The company was founded by Bevan Andrew Slattery on May 11, 2010, and is headquartered in Brisbane, Australia.
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