Highlights

  • MP1 closed at $19.04 on 9 June 2026, up 3.03%; Canaccord Genuity rates Buy at $22.50 and Macquarie rates Outperform at $26.85 — implying 18% to 41% upside.
  • sh secured three GPU, CPU, network, and storage contracts with combined TCV of approximately USD $182.9 million (AUD $254.0 million) representing approximately USD $65.2 million in ARR.
  • The contracts require approximately USD $101 million in incremental capex, with an attractive payback of approximately 2 years; full ARR contribution expected on a run-rate basis by end of H1 FY27.

 

Megaport Limited (ASX:MP1) closed at $19.04 on 9 June 2026, gaining $0.56 or 3.03% during the session. The positive move brings the stock closer to — but still materially below — dual broker Buy recommendations from Canaccord Genuity at $22.50 and Macquarie at $26.85. At the midpoint of those targets, approximately $24.67, the implied upside from the current price is around 30%. The share price strength reflects growing market recognition of Megaport positioning as an infrastructure platform for the artificial intelligence economy.

The company pivot from a network-centric connectivity Business toward a combined network and compute infrastructure platform — accelerated by the Acquisition of Latitude.sh in late 2025 — has materially altered the Revenue growth profile and the Target market addressable by the group. The contract wins announced in May 2026 represent the first major commercial validation of that combined platform strategy.

The Latitude.sh Contracts: Scale and Structure

On 14 May 2026, Megaport announced that Latitude.sh had secured three binding, fixed-term contracts with two US-based technology companies running AI applications and inference workloads. The combined total contract value is approximately USD $182.9 million (AUD $254.0 million at the prevailing Exchange Rate), representing approximately USD $65.2 million (AUD $90.6 million) in annualised Recurring Revenue. Two of the three contracts carry 36-month initial terms, with the third at 24 months, together representing approximately 90% of the combined TCV in the longer-duration contracts.

Revenue under the contracts is committed regardless of usage — a feature that distinguishes these from variable-use cloud arrangements and provides Megaport with a predictable Cash Flow profile across the contract terms. The ARR will be recognised incrementally as the hardware is deployed and becomes operational, with the full contribution expected on a run-rate basis by the end of H1 FY27. The contracts cover GPU, CPU, network, and storage infrastructure, reflecting the breadth of the Latitude.sh platform.

Capital Deployment and Return Profile

The three contracts require approximately USD $101.0 million (AUD $140.3 million) in incremental Capital Expenditure, primarily for high-performance NVIDIA GPU, compute, network, and storage hardware. Megaport has placed the hardware orders, with delivery expected in late FY26 or early FY27, and phased deployment commencing in H1 FY27. The payback on the initial compute server capex is approximately two years — an attractive return profile for infrastructure of this nature.

Megaport intends to fund the capex via a combination of existing cash reserves and a newly-upsized AUD $150.0 million committed Debt Facility from a leading global financial institution. Pro-forma Liquidity, including these contracts and a separate AUD $35.4 million compute contract announced on 27 April 2026, would have been approximately AUD $199.1 million as at 31 December 2025. Following each contract term, the hardware Assets will be deployed within the Latitude.sh on-Demand pool, available to generate revenue for their remaining useful life — either through renewal by existing customers or on the open platform.

AI Infrastructure Platform: Strategy and Competitive Position

Megaport CEO Michael Reid described the company as being "at the forefront of an accelerating inflection point" as use cases shift from AI foundation model Training to inference and edge deployment. The combination of Megaport automated network infrastructure — spanning more than 1,100 data centre locations globally — with Latitude.sh compute and storage capabilities creates a platform capable of deploying distributed AI infrastructure at scale, close to end markets.

The strategic logic is compelling in the context of enterprise AI adoption: large-scale AI workloads require ultra-low latency, high-performance networking, and the ability to deploy dedicated hardware rapidly across geographic footprints. Megaport platform addresses each of these requirements. One of the two contract customers is an existing Megaport network customer, demonstrating successful upsell from connectivity to compute — a proof point for the cross-sell thesis underpinning the Latitude.sh acquisition rationale.

Guidance and Broker View

Megaport reaffirmed its FY26 Revenue and EBITDA guidance at the time of the contract announcements. The existing FY26 Group capex guidance range of AUD $90-100 million remains unchanged for the base business; the Latitude.sh contracts represent incremental capex of up to AUD $140.3 million should the hardware be delivered before 30 June 2026. Full details of network and compute financial performance are expected at the full year results in August 2026.

Conclusion

Megaport announcement of USD $182.9 million in combined Latitude.sh contracts represents the most tangible commercial evidence to date that the network-plus-compute strategy is gaining traction with enterprise AI customers. The contract Economics — committed revenue, attractive payback, extended terms — are materially different from the variable-use revenue that characterises some infrastructure businesses and represent an improvement in revenue quality alongside the growth trajectory. With both Canaccord Genuity and Macquarie carrying Buy-equivalent recommendations at targets well above the current price, and with the full ARR contribution from these contracts expected on a run-rate basis by end of H1 FY27, the next 12 months will be a key test of the platform scalability.