NEXTDC (ASX: NXT) announced a record 250 megawatts (MW) contract win at its S4 data centre during the month. In data centres, megawatts refer to the amount of power capacity available to run customers’ IT equipment (servers and infrastructure), which is the primary driver of how much customer demand a facility can support. This lifts total contracted utilisation (including the new contract) to 667MW, a 60% increase in a single quarter. The company expects existing contracts to generate over $1 billion in earnings before interest, taxes, depreciation and amortisation (EBITDA) once these convert into billing by FY2030. To support an accelerated build program, NEXTDC brought forward an additional $1.5 billion of S4 capital expenditure into FY2027. It also launched a $1.5 billion entitlement offer, upsized the La Caisse hybrid securities facility to $1.7 billion and raised $750 million in subordinated debt. We believe these steps de-risk the near-term pipeline and provide sufficient liquidity to build through FY2027 and beyond. We see the company as well-positioned to benefit from strong demand for computational power, with valuations not yet reflecting the earnings potential being secured through investment grade hyperscale customers.
Macquarie Group’s (ASX: MQG) share price was supported during the month by favourable conditions across its key divisions. Commodities and liquefied natural gas (LNG) volatility has increased following the Middle East conflict, which is supportive of near-term earnings. We expect gas volatility to remain structurally higher given damage to LNG infrastructure, providing a favourable backdrop for the company’s Commodities and Global Markets (CGM) division. This was also highlighted by recent US bank and asset manager results, which showed strong commodities earnings. Capital markets activity has remained resilient and demand for real assets continues to rise, supporting a strong pipeline for infrastructure asset sales. Recent divestments of the meters business (which finances, installs and manages electric and gas meters in the UK) and AirFinance (that leases aircraft to airlines worldwide) are expected to generate material gains. Macquarie Group continues to be a key holding in the investment portfolio as we see the structural tailwinds across commodities, infrastructure and the energy transition supporting an earnings upgrade cycle.