Megaport (ASX:MP1) Rockets 70% in a Month — Macquarie Says Rally Has Further to Run

Sonal Goyal

15 May 2026 07:35 PM AEST

Megaport (ASX:MP1) Rockets 70% in a Month — Macquarie Says Rally Has Further to Run

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Highlights

Megaport has surged 70.15% over the past month, closing at AUD 12.88 on 15 May 2026, as a wave of major contract wins reignited investor confidence.
Macquarie Research has an Outperform rating on the stock with a target price of AUD 26.30, implying significant further upside even after the recent rally.
Megaport's Subsidiary Latitude.sh secured AUD 254 million in new compute, network, and storage contracts in May 2026, cementing its position as a critical AI infrastructure platform.

There are few stories on the ASX in 2026 more striking than that of Megaport Limited (ASX:MP1). A stock that had spent much of the recent past searching for its narrative found one in emphatic fashion during the month of May. Trading at AUD 12.88 on 15 May 2026, Megaport has delivered a staggering 70.15% return over just the past month — a move driven not by speculation, but by a cascade of substantial, Revenue-generating contract wins that have fundamentally changed the market's perception of the company's Earnings trajectory.

Yet what is arguably more interesting than the size of the rally is what experienced observers are saying about it. Macquarie Research, one of Australia's most closely followed institutional Brokers, has an Outperform rating on Megaport with a target price of AUD 26.30. At today's price of AUD 12.88, that target represents more than double the current Market Value — suggesting that despite the extraordinary gains of the past month, Macquarie believes the market is still materially undervaluing the company's long-term earnings potential.

The Latitude.sh Breakthrough: A Business Transformed

The catalyst for Megaport's dramatic re-rating has been the explosive growth of Latitude.sh, the company's Wholly Owned Subsidiary focused on GPU, CPU, and storage infrastructure. On 14 May 2026, Megaport announced that Latitude.sh had secured three major contracts across two customers, with a combined total contract value of approximately USD 182.9 million — equivalent to AUD 254 million at prevailing exchange rates. The contracts represent approximately USD 65.2 million, or AUD 90.6 million, in annualised Recurring Revenue.

The structure of these deals is particularly significant for investors focused on revenue quality and predictability. Two of the three contracts, representing roughly 90% of the combined contract value, carry 36-month initial terms, while the third has a 24-month duration. Critically, the contracts are binding and fixed-term, meaning they secure committed long-term revenue irrespective of actual usage — a major step forward from the more variable, consumption-based revenue model that characterised Latitude.sh's earlier operations. This shift from usage-dependent to contracted recurring revenue has profound implications for how the market should value the business.

Building Momentum: The April Contract Win

The May announcement did not emerge from a vacuum. It followed closely on the heels of a significant contract win announced on 27 April 2026, when Latitude.sh secured a 36-month agreement with a new customer for compute and storage services, with a total contract value of approximately USD 25.1 million (AUD 35.4 million) and annualised recurring revenue of approximately USD 8.4 million (AUD 11.8 million). The April win provided early evidence that the momentum being built within Latitude.sh's commercial pipeline was substantive and scalable.

At the time of the April announcement, Megaport disclosed that Latitude.sh's compute annualised recurring revenue for its on-Demand product — excluding the newly signed strategic contract — had grown 31% to USD 58.7 million from USD 45 million at 31 December 2025. This organic growth figure, achieved before the major contract wins, underscores the genuine demand-driven momentum at Latitude.sh rather than a one-off phenomenon. The platform is evidently capturing a meaningful share of the extraordinary AI-driven surge in demand for compute infrastructure.

Network Business Continues to Deliver

While Latitude.sh has rightfully attracted the bulk of recent investor attention, it is important to recognise that Megaport's legacy network connectivity business continues to perform strongly. As of 31 March 2026, Megaport Network annualised recurring revenue — including India — stood at AUD 272 million, representing growth of 23% on a constant currency basis compared to the same period in 2025. Excluding India, Network ARR grew 20% on a constant currency basis.

This performance reflects the ongoing global buildout of data centre interconnects and the structural tailwind from enterprises migrating workloads to multi-cloud and hybrid environments. Megaport's automated network-as-a-service platform is well positioned to continue benefiting from this transition, and the steady ARR growth in the network business provides a durable and growing earnings base against which the higher-growth Latitude.sh operations are now being layered.

AI Infrastructure Demand: A Structural Tailwind

The context in which Megaport is operating cannot be overstated. The acceleration of artificial intelligence adoption across enterprise, research, and government sectors has created an unprecedented surge in demand for the underlying compute and network infrastructure that makes AI workloads possible. GPU compute, in particular, has become a scarce and highly sought-after resource, with waiting lists for NVIDIA chips extending well into 2026 and beyond at the largest hyperscalers.

Companies like Latitude.sh that can offer available, high-performance compute infrastructure on committed terms are therefore in an exceptionally strong commercial position. The fact that Latitude.sh secured AUD 289.4 million in combined contract value across just three weeks in April and May 2026 suggests its pipeline is both deep and commercially advanced. For a business that Megaport acquired to accelerate its transformation into a full-stack infrastructure platform, the early returns have been remarkable.

Conclusion

Megaport's transformation story is one that investors are rapidly repricing in real time. The 70% share price gain over the past month reflects the market digesting a series of contract wins that have fundamentally altered the company's revenue profile and growth trajectory. Yet with Macquarie Research maintaining an Outperform rating and a target price of AUD 26.30 — more than double the current price — the broker community's assessment is that the market has still not fully appreciated the scale of what Megaport and Latitude.sh are building. As AI infrastructure demand continues to grow and the contracted revenue base expands, this story looks far from over.

FAQs

Q: Why has Megaport's share price surged 70% in a month?

A: The surge reflects a series of major contract wins by Megaport's subsidiary Latitude.sh. In April and May 2026, Latitude.sh secured combined total contract value of approximately AUD 289.4 million in compute, storage, and network contracts, dramatically improving the company's contracted recurring revenue profile.

Q: What is Macquarie's rating and target price for Megaport?

A: Macquarie Research has an Outperform rating on Megaport (ASX: MP1) with a target price of AUD 26.30. At the 15 May 2026 price of AUD 12.88, this implies more than 100% upside from the current share price.

Q: What is Latitude.sh and why is it important to Megaport?

A: Latitude.sh is a wholly owned Megaport subsidiary that provides GPU, CPU, and storage infrastructure. Under Megaport's ownership it has become a key growth driver, with on-demand compute ARR growing 31% to USD 58.7 million, before the addition of large fixed-term contracts worth AUD 254 million in TCV announced in May 2026.

Q: How is Megaport's network business performing?

A: Megaport Network ARR, including India, reached AUD 272 million as of 31 March 2026, up 23% on a constant currency basis year-over-year. Excluding India, network ARR grew 20% on constant currency terms, reflecting strong ongoing demand for automated network connectivity services.

Q: What is the significance of the fixed-term contract structure in Latitude.sh's recent wins?

A: The contracts are binding and revenue is committed regardless of actual usage, which represents a significant shift from Latitude.sh's prior consumption-based model. Long-term fixed contracts provide greater revenue visibility and predictability, which typically supports higher valuations from institutional investors.

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