BRISBANE, May 15, 2026, 08:04 AEST
Shares of Megaport Ltd surged 27.72% to finish at A$12.58 on Thursday. The pop came after the Australian network infrastructure firm announced that its Latitude.sh division landed three fixed-term compute, network, and storage deals totaling A$254 million, working with two separate U.S. tech providers.
The contracts lock in a solid revenue stream for Megaport’s newer compute arm, backing its expansion from cloud connectivity into AI infrastructure. According to Megaport, once the hardware is up and running—targeted by the end of the first half of fiscal 2027—the deals are set to contribute roughly A$90.6 million in annualised recurring revenue, or ARR, over a twelve-month period.
That’s a hefty figure against Megaport’s latest results. For the first half of FY26, the company logged A$134.9 million in revenue. Group ARR surged 49% year on year to A$338 million after factoring in acquisitions, according to a February filing.
Neither customer was identified. Megaport said both companies are U.S. tech providers working with AI apps and inference workloads—using trained models for answers or output. One is a returning Megaport client. Roughly 90% of the total contract value is locked in for an initial 36 months, with the rest on a 24-month term, according to the filing.
Megaport is positioning itself as an “essential platform for powering the applications of tomorrow,” Chief Executive Michael Reid said, as more AI workloads shift to inference and edge computing—bringing processing nearer to end users. Reid also described Megaport as a “one-stop platform for the AI ecosystem.” ASX Announcements
The deal carries a hefty hardware price tag. Megaport disclosed that the contracts demand roughly A$140.3 million in extra capital spending, most of it earmarked for high-powered Nvidia GPUs, along with compute, network, and storage gear. GPUs—graphics-processing units—are the chips at the heart of AI operations.
Megaport plans to cover the outlay using its current cash and a fresh boost to its debt facility, which now stands at A$150 million. Factoring in these agreements and another compute contract from April, pro-forma liquidity came in at roughly A$199.1 million as of Dec. 31.
But execution risk isn’t getting any smaller. Revenue’s forecast to land in chunks, tied to hardware showing up and getting activated. Megaport is now shouldering heavier customer concentration and equipment risk than it did when it was just running a network business. Delivery delays, unexpected shifts in demand from the pair of customers, or hardware that turns out tricky to redeploy profitably after contracts wrap—any of that could muddy the payback picture.
Megaport stuck to its FY26 revenue and EBITDA targets for the merged group. EBITDA stands for earnings before interest, tax, depreciation and amortisation. Back in February, management flagged revenue between A$302 million and A$317 million, EBITDA margins at 21% to 24%, and capex in the A$90 million to A$100 million range, not counting additional outlays linked to fresh contracts and the April transaction.
UBS analyst Tim Plume, quoted by Capital Brief, stuck with his buy rating and A$14.65 target on the stock, describing the news as a “significant win for the business.” Plume noted that the contracts will “require upgrades” to consensus group EBITDA estimates, with his early analysis signaling upside for FY27 forecasts. Capital Brief
That deal gives some validation to Megaport’s decision back in November to acquire Latitude.sh, a compute-as-a-service outfit, for US$150 million upfront, plus as much as US$150 million more tied to future milestones. At the time, Megaport argued the Latitude.sh buy would let it pair its own network automation with powerful compute capabilities geared toward cloud, AI, and data-centre applications.
Rivals are moving fast. Equinix touts Fabric as an on-demand private connection hub for cloud and AI infrastructure. PacketFabric pushes a software-defined network-as-a-service to plug customers into the cloud. Megaport’s latest play: linking its network layer directly to Latitude.sh compute power instead of just selling connections.
Thursday’s rally wasn’t enough to push the stock past its 52-week high of A$17.87, according to MarketScreener data. So, there’s still potential for a rerating. But that lingering gap suggests investors are still weighing concerns—growth, capital intensity, and exactly when the compute strategy starts to deliver earnings haven’t been put to bed yet.
Megaport plans to share additional information on network and compute performance with its full-year results in August, the company said.
