Australian data center operator NextDC is the latest company to be hit by a wave of selling by AI stock investors. Due to a significant reduction in its annual revenue and profit forecasts, and attributing the reasons to community opposition and delays in power grid upgrades, the company, headquartered in Brisbane, saw its stock price fall by 41.7% on Wednesday.
NextDC currently expects its annual revenue to be between 475 million and 500 million Australian dollars, which is lower than the previous estimate of 615 million to 640 million Australian dollars. The company has also lowered its earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to between 245 million and 265 million Australian dollars.
In the announcement submitted to the Australian Securities Exchange, NextDC attributed the setback in performance to delays in the progress of its Melbourne M3 data center. The power company Jemena that supplies electricity to M3 suspended some renovation projects last month; the company expects that these projects will not be resumed until February 2027 at the earliest.
"Jemena has suspended some of the network works required for the next power grid upgrade in Melbourne," NextDC CEO Craig Scroggie stated in a stock announcement. "The suspension is due to opposition from the community and stakeholders to these works, as well as a lack of approval from the local council before further consultations."
NextDC will also cut capital expenditures by 750 million Australian dollars and "put on hold" land acquisitions and new development projects for the foreseeable future.
Australian data centers – like their counterparts in the United States – are sparking protests from local communities. Residents are concerned that data centers will affect power and water supply, as well as exacerbate noise pollution.
Not just NextDC
The sharp drop in the stock price of NextDC has marked a significant milestone for the turmoil experienced by data centers and AI infrastructure companies over the past few weeks.
On October 9th, another Australian data center operator, Firmus, suddenly cancelled its plans to go public in Australia, which was set to be one of the largest listings in the country's history. The company subsequently stated that it would turn to the private market for financing. Investors are said to be concerned about the company's debt level and its lack of track record in data center construction.
According to media reports, AirTrunk, a data center operator under Blackstone, decided on October 13 to postpone the listing of its real estate investment trust in Singapore.
Also last week, the bond price of CoreWeave of the American company neocloud fell below 80 cents per dollar, a level that usually indicates financial pressure on the company. Tesla's CEO, Elon Musk, noticed this and posted on his social media platform X, saying “yikes”.
Subsequently, on October 20th, the stock price of South Korean cloud service provider Elice Group plummeted by 32% on its first day of trading. (On Wednesday, the stock price rebounded by 30%, reaching the daily price limit.)
More chain reactions may be on the horizon. Bloomberg reported on Wednesday, citing unnamed sources, that DayOne Data Centers, headquartered in Singapore, is considering postponing or scaling back its upcoming IPO in the United States. DayOne did not immediately respond to requests for comment; it also refused to comment to Bloomberg.
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