Megaport's Major AI Investment
Megaport Raises A$827M for Global AI Cloud, Shifting to On-Demand GPU Model
Key Points
Megaport requested a trading halt while it undertook the capital raising tied to the AI contracts and GPU Pool announcement.
The on-demand GPU Pool is guided to deliver payback of 16 to 22 months at optimal utilisation, and the article notes Megaport previously only deployed GPU hardware when customers signed 24 to 36 month take-or-pay commitments—meaning the new structure explicitly changes Megaport’s exposure to utilization demand.
Pricing terms for the accelerated entitlement offer included a 10.9% discount to TERP and a 13.9% discount to the prior day’s A$16.61 closing price.
Megaport reported stronger Network metrics alongside the Compute-led ARR jump: Network ARR increased 25% year-on-year to A$277.7 million, and Network net revenue retention was 113%.
Australian network company Megaport has halted trading on the ASX after announcing four new AI infrastructure contracts worth A$458.9 million and a A$827.3 million share offer to fund a major push into AI computing Motley Fool. The deals mark the biggest strategic shift in the Brisbane-based company's history, moving it from selling network connections to owning and running AI computing hardware at scale Bloomberg.
Shares were last traded at A$16.61 on June 1. The new shares are priced at A$14.30 each — a 13.9% discount to that close — and the offer is fully underwritten AFR.
Four New Contracts Signal Surging AI Inference Demand
The four contracts carry a total value of A$458.9 million and are all with US-based technology providers Startup Fortune. Work is set to begin in the first half of FY2027. The contracts will require A$369.5 million in capital spending, mostly on NVIDIA GPUs plus network and storage hardware.
CEO Michael Reid said, "AI inference represents one of the biggest infrastructure opportunities of the next decade." Inference means running AI models in real time — as opposed to training them. It needs low-latency, meaning compute must sit close to the end user. Megaport operates across more than 1,100 data centers in 31 countries, giving it a rare geographic edge HeadTopics.
A$350 Million GPU Pool Bets on On-Demand Customers
Beyond the contracts, Megaport plans to spend an extra A$350 million building an on-demand GPU Pool. This is a significant risk shift. In the past, Megaport only bought GPU hardware after customers signed 24-to-36-month take-or-pay deals Startup Fortune. Now it is buying hardware first and betting customers will show up.
The company says the GPU Pool will pay for itself in 16 to 22 months at optimal use. Enterprise customers can access capacity through fixed contracts or a pay-as-you-go model. Analysts at Stocks Down Under call it the most significant strategic move in the company's history, letting Megaport capture "burst" demand it previously had to turn away.
Capital Raise Dwarfs Past Deals in Australian Tech
The A$827.3 million raise is the second largest in Australian tech this year, trailing only NextDC's A$1.1 billion raise in April 2024 Bloomberg. New shares are priced at A$14.30 — also a 10.9% discount to the theoretical ex-rights price, known as TERP. The institutional component runs during the trading halt, with normal trading expected to resume around June 5.
Megaport's Compute division has grown fast since it bought bare-metal cloud provider Latitude.sh in November 2025 for roughly US$150 million. Pro forma Compute ARR — that is, annualized recurring revenue from the compute business — now sits at A$385.2 million, a 6.4x jump since that deal closed HeadTopics. Total group pro forma ARR reached A$662.9 million.
Steady Network Business Underpins the Riskier Compute Bet
While the Compute pivot grabs headlines, Megaport's original network business keeps growing steadily. Network ARR rose 25% year-on-year to A$277.7 million. Network net revenue retention — a measure of how much existing customers spend over time — hit 113%, meaning existing clients are spending more each year AFR.
FY26 revenue guidance was tightened to A$307 million–A$315 million, narrowing from the previous range of A$302 million–A$317 million. EBITDA and capex guidance stayed unchanged Startup Fortune. The steady network metrics give the company a reliable cash base as it bets big on AI infrastructure — though critics note that owning GPU hardware exposes Megaport to rapid tech depreciation and unpredictable demand in ways that selling network connections never did.
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