Goodman Group shares (ASX: GMG) fell 4% to A$28.64 early, before steadying into the close, now back at A$29.83, just 0.73% lower on a mixed session for holders. The move comes as the company posted an update, with a portfolio value of A$87.1 billion and reaffirming its 9% operating earnings per share growth target for FY26, underscoring market caution around execution risk as the company pivots aggressively into data centre development.
The GMG share price continues to face technical resistance around the A$30.80-A$31 level, its year-to-date break-even range, even as shares have recovered ~20% from March lows. Over the past 12 months, however, Goodman remains down 9.2%, reflecting lingering concerns about capital intensity and the sustainability of AI-driven demand as the company scales its development pipeline.
The Update
In its third-quarter operational update, Goodman reported total portfolio value of A$87.1 billion as at 31 March 2026, up from approximately A$85.6 billion at 30 June 2025. Development work in progress now stands at A$14.5 billion, with management projecting that figure will reach roughly A$18 billion by June 2026. Notably, data centres now account for approximately 73% of the development pipeline, a sharp increase from 57% at the end of FY25, signalling the company’s strategic tilt toward digital infrastructure.
Annual like-for-like net property income growth came in at 4.1% for the group, or 6.1% when excluding Greater China, where softer conditions continue to weigh on performance. Portfolio occupancy remained robust at 95.7% overall and 97% excluding Greater China. The company leased 3.3 million square metres over the past 12 months, generating A$491 million in annual rental income, while the yield on cost for current work in progress sits at 8.0%, a figure that underpins management’s confidence in future earnings accretion.
Goodman’s board has approved a target of 9% operating earnings per security growth for FY26, a guidance level management reiterated it is on track to deliver. The company’s strategic focus centres on redeploying capital into large-scale, power-rich sites to capture growth in artificial intelligence, automation, and urban logistics. Securing additional power capacity, now totalling 6.4 gigawatts across sites the company controls and progressing customer commitments in the data centre segment remain top priorities.
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The update provided no new major lease announcements or customer commitments, which may explain the muted market reaction. While the fundamentals appear strong on paper, the sheer scale of the capital deployment raises questions about execution risk, construction timelines, and the durability of hyperscaler demand for powered metro sites.
Balancing Risk/Reward
From a valuation perspective, markets appear to be weighing Goodman’s transformation from a traditional industrial real estate investment trust into an infrastructure-like play on AI and cloud computing. The company’s “power bank” of 6.4 gigawatts and its control of scarce urban land positions it as a critical supplier to hyperscalers and data centre operators, but it also introduces new risks: regulatory constraints on energy-intensive facilities, potential cost overruns on mega-projects, and exposure to a small number of large technology tenants.
Recent capital raises including a A$2.7 billion debt raise and prior equity issuance has bolstered liquidity and reduced near-term refinancing risk, but it also raises the bar on returns. Existing shareholders will be watching closely to ensure that the 8% yield on cost translates into sustainable earnings growth as projects stabilise and come online over the next 18 to 24 months.
Technical resistance at A$31 suggests that while the long-term AI infrastructure narrative remains intact, markets are demanding more signed leases, visible power connections, or stabilised returns before pushing the stock higher. Bulls point to structural tailwinds from AI and e-commerce, while bears will focus on execution complexity, power constraints, and valuation after the recent rally. With A$18 billion of work in progress on the horizon and 9% earnings growth guidance in play, it will be interesting to see if bulls can shift the YTD charts positive after the recent bounce off lows.
Bull Case:
- A$18 billion development pipeline at 8% yield on cost supports multi-year earnings growth
- 6.4 gigawatt power bank provides scarce, moat-like asset for AI data centre demand
- 9% operating EPS growth target reaffirmed with strong occupancy and leasing momentum
- Strategic pivot into digital infrastructure captures structural AI and cloud computing tailwinds
- Diversified global platform and capital partnerships reduce balance sheet and execution risk
Bear Case:
- 73% of work in progress concentrated in complex data centres raises execution risk
- Power constraints and regulatory hurdles could delay or downsize major project commitments
- Greater China weakness and cap rate sensitivity threaten portfolio valuations and income growth
- Heavy capital intensity and recent equity dilution raise bar on return expectations
- Technical resistance at A$31 and 12-month underperformance signal valuation concerns persist
