NEXTDC Ltd announced on Friday that it has entered into a memorandum of understanding with OpenAI to collaborate on the development of a hyperscale AI campus and graphics processing unit supercluster in Sydney. This news has led to a surge in NEXTDC’s shares, which rose by as much as 10.9% to A$14.900, its highest level since November 13.
The project will be based at NEXTDC’s S7 site at Eastern Creek in Sydney, which was acquired last year for nearly A$353 million. The site has a potential capacity of 550 megawatts and falls under OpenAI’s Australia program, aimed at boosting AI adoption and infrastructure investment.
The increasing demand for AI technologies has fueled a global rush into data center investments, benefiting operators like NEXTDC. Sydney has also outlined a roadmap to enhance AI adoption in its economy, moving away from previous plans for stricter regulations on high-risk scenarios.
In response to the collaboration with OpenAI, NEXTDC recently raised its FY26 capex guidance by A$400 million to a range of A$2.2 billion to A$2.4 billion. This increase in capital expenditure will facilitate the expansion of inventory to meet the demands of new contracts.
Michael McCarthy, CEO of AU & NZ at trading platform Moomoo, highlighted the significance of the partnership with OpenAI for NEXTDC. He mentioned that having a foundation client like OpenAI allows NEXTDC to move forward with a project aligned with government initiatives for AI and productivity, potentially attracting investors due to the guaranteed revenue stream.
However, McCarthy pointed out potential challenges related to copyright issues surrounding the training of OpenAI’s language models and escalating power costs. While the deal aligns well with the current market focus on AI, McCarthy warned that investors’ initial enthusiasm might diminish over time as challenges arise.
Overall, the collaboration between NEXTDC and OpenAI signifies a significant step for the data center operator, positioning it at the forefront of AI development in Sydney. As the demand for AI technologies continues to grow, this partnership is expected to drive innovation and growth in the AI sector.
