Further to yesterday's update (below), Morgans highlights the announcement by NextDC yesterday that it has secured a 50MW hyperscale AI deal for its Melbourne facility.

The analyst emphasises this is a step up and ahead of expectations, involving a large AI platform with around 2MW BAU (enterprise sales) in the March 2025 quarter.

Target of $18.80 retained with Add rating.

Morgans dissects the latest updates from cloud service providers, including Google Cloud, Microsoft's Azure, Amazon's AWS, and Meta, showing the April results were generally better than expected and AI commentary more upbeat alongside data centre demand.

Capex from the tech majors rose an average of 2%, the broker notes, to US$309bn, a rise of 46% on a year earlier.

Data centre stocks, including NextDC, started de-rating three months ago, along with the company's largest clients of Microsoft, AWS, and Alphabet.

The analyst believes NextDC is well placed to benefit from growth in demand. Medium-term growth is underwritten by around 60MW that is contracted, with revenue streams to flow over time.

Sector: Software & Services.

Target price is $18.80.Current Price is $13.71. Difference: $5.09 - (brackets indicate current price is over target). If NXT meets the Morgans target it will return approximately 27% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2025 Acquisdata Pty Ltd., source FN Arena