NEXTDC (ASX:NXT): Valuation Check After Raised FY26 Capex Guidance and AI-Driven Contract Wins

NEXTDC (ASX:NXT) has caught investors attention after lifting its FY26 capital expenditure guidance to A$2.2 billion to A$2.4 billion, following a 29% jump in contracted utilisation from fresh AI and cloud driven deals.

See our latest analysis for NEXTDC.

Those contract wins and the upgraded capex plans have come after a softer patch, with the 30 day share price return at minus 14.22% and 1 year total shareholder return at minus 16.90%, but the three year total shareholder return of 53.74% suggests the longer term growth story still has support and that recent weakness may reflect near term nerves rather than a broken thesis.

If this AI driven demand theme has caught your eye, it could be worth exploring other high growth tech names through high growth tech and AI stocks to see what else fits your strategy.

With analysts seeing roughly 50% upside to their price targets, but the market wary of rising capex and ongoing losses, is NEXTDC now a mispriced AI infrastructure play or is future growth already fully baked in?

Price-to-Sales of 20.4x: Is it justified?

On a last close of A$13.57, NEXTDC trades on a steep valuation premium, with the market assigning a rich price-to-sales multiple versus peers.

The price-to-sales ratio compares a company’s market value to its revenue and is often used for high growth, loss making infrastructure and software businesses where earnings are not yet a reliable guide.

For NEXTDC, investors are effectively paying A$20.40 for every A$1 of annual revenue, which signals strong confidence that rapid top line expansion will eventually translate into operating leverage and future profitability. Yet this is significantly higher than the estimated fair price-to-sales ratio of 16.2 times, a level the valuation model suggests the market could drift back toward if growth expectations cool.

Compared with the global IT industry average price-to-sales of just 1.5 times, and even a peer average of 15.1 times, NEXTDC’s 20.4 times stands out as aggressively priced. This reinforces the view that expectations for future revenue growth and scale benefits are far more optimistic than for the typical sector name.

Explore the SWS fair ratio for NEXTDC

Result: Price-to-Sales of 20.4x (OVERVALUED)

However, rising capex needs and persistent losses mean that any slowdown in AI or cloud demand could quickly expose how tightly wound current expectations are.

Find out about the key risks to this NEXTDC narrative.

Build Your Own NEXTDC Narrative

If you see things differently or want to dig into the numbers yourself, you can quickly build a personalised view in just minutes: Do it your way.

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.

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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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