Citi upbeat on Australia's NEXTDC after media report OpenAI to anchor co's Sydney data centre

NEXTDC

04/12/2025 19:14

** Citi sees a confidence boost in NEXTDC NXT.AX after media reports that Wall Street's AI darling OpenAI has signed a deal with the Australian data centre operator

** On Thursday, a media report said that the ChatGPT owner has signed a deal as anchor tenant for NXT's 650 Megawatt data centre in Eastern Creek

** Brokerage says the contract size remains undisclosed, but given S7 data centre’s wholesale "build-to-suit" design, expects it to be hefty, likely above 100 MW, and additive to last week’s deal

** Sees earnings impact no sooner than FY28, noting the data centre operator has yet to kick off the development approval process, though approvals could be fast-tracked under the new Investment Development Authority

** Citi says earnings upside will be capped as S7 is structured as a JV with NXT holding 20%-25%, but calls the deal a strong positive, boosting confidence in its wholesale build and widening its client mix

** Stock down 10.8 %YTD as of last close

(Reporting by Kumar Tanishk in Bengaluru)

((Tanishk.Kumar@thomsonreuters.com; X: @thatstanishk http://www.x.com/thatstanishk))