NEXTDC (ASX:NXT) Is Down 5.5% After OpenAI-Backed Sovereign AI Campus Deal News Event – Has The Bull Case Changed?

• In early December 2025, NEXTDC confirmed it had signed a Memorandum of Understanding with OpenAI to develop a next-generation hyperscale AI campus and large-scale GPU supercluster at its S7 site in Eastern Creek, Sydney, providing secure, sovereign infrastructure for mission-critical workloads across sectors including government, defence, finance, education and healthcare.
• An interesting aspect of the project is S7’s closed-loop high-density liquid cooling design, which avoids ongoing use of potable water while meeting Australia’s SOCI-aligned security and resilience standards for future liquid-cooled AI architectures.
• We’ll now look at how this OpenAI-backed sovereign AI campus, alongside a recent 5.51% seven-day share price decline, reshapes NEXTDC’s investment narrative.

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What Is NEXTDC's Investment Narrative?

To own NEXTDC today you have to believe in its role as a critical backbone for Australia’s digital and AI infrastructure, even though the company is still loss making and trading on a rich sales multiple. The new OpenAI MoU reinforces that long-term AI and hyperscale demand story, but it does not change the near-term reality of heavy capex, a limited cash runway of under a year and no clear pathway to profitability over the next three years. With the S7 campus only expected to deliver first phase capacity in the second half of 2027, the OpenAI partnership looks more like a future growth pillar than an immediate earnings catalyst, especially against a 5.51% seven-day share price decline and a much larger three-month pullback. That tension between ambitious growth plans and funding risk is now central to the NEXTDC thesis.

However, short cash runway and continued losses are pressures investors should not ignore. Our expertly prepared valuation report on NEXTDC implies its share price may be too high.

Exploring Other Perspectives

Fourteen fair value estimates from the Simply Wall St Community span from A$1.07 to A$20.81, underlining just how far apart individual views can be. When you set those against NEXTDC’s continued losses and capital needs for S7, it becomes clear why investors may want to compare multiple perspectives before forming a conviction.

Explore 14 other fair value estimates on NEXTDC - why the stock might be worth less than half the current price!

Build Your Own NEXTDC Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your NEXTDC research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free NEXTDC research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate NEXTDC's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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