Megaport shares (ASX: MP1) pulled back sharply to start the week, closing 8.3% lower at A$16.35, as a five-day rally ran out of steam at a key technical resistance level. The move brings the pullback over the past month to 23.46%, though the stock remains one of the ASX’s standout year-to-date performers, up 38.15% in 2026.
The session’s decline was the clearest signal yet that short-term momentum has shifted for Megaport. After rallying steadily toward its 50-day simple moving average, a widely watched technical threshold, the MP1 share price was firmly rejected at that level and has now posted back-to-back red sessions.
Despite the recent weakness, Megaport shares have delivered a 38.15% gain year-to-date, making the current pullback look more like a post-results cooling-off period with the macro backdrop shifting rather than a structural breakdown.
Markets React To Strong Revenue, Widening Losses, and a Bold AI Pivot
Megaport’s FY26 annual results told a story of two competing narratives. On the top line, the company delivered revenue of A$312.2 million, representing growth of approximately 37% to 40% year-on-year, a result that underscores the company’s accelerating commercial momentum. EBITDA came in at A$77.1 million, up 24% year-on-year, with an EBITDA margin of 25%.
The headline that rattled markets, however, was the statutory net loss after tax, which widened dramatically to A$39.0 million compared to just A$0.3 million in FY25. The sharp deterioration in the bottom line reflects the company’s aggressive investment cycle, including the integration of compute-as-a-service platform Latitude.sh and a significant ramp-up in capital expenditure tied to new AI infrastructure contracts.
Top Australian Brokers
- Pepperstone - Top Australian broker - Read our review
- eToro - Invest in ASX and international shares - Read our review
That AI pivot is central to Megaport’s long-term investment thesis. The company has secured new AI infrastructure contracts worth USD$359.4 million \u2014 approximately A$506.2 million, which are expected to generate around USD$91.7 million, or roughly A$138 million, in annualised recurring revenue. To service these workloads, Megaport has committed USD$207.2 million toward high-performance Nvidia GPUs, compute nodes, networking, and storage hardware.
The acquisition of Latitude.sh has effectively transformed Megaport from a pure-play Network-as-a-Service provider into an integrated AI compute, network, and storage infrastructure platform. Management is positioning the business to capture enterprise demand for AI inference workloads, a market that continues to grow at a pace that few technology segments can match.
To fund this buildout, Megaport restructured its balance sheet by securing a new A$825 million debt facility. The move has drawn scrutiny from more conservative corners of the market, with concerns raised about rising gearing levels and the company’s path to statutory profitability. However, institutional brokers have pushed back on those concerns, arguing that contracted multi-year EBITDA commitments, totalling approximately A$620 million in annualised contracted EBITDA \u2014 provide a credible runway to nearly A$600 million in surplus liquidity by FY27, even without signing additional deals.
Management has guided for an EBITDA margin of 38% to 40% of revenue in FY27, a significant step-up from the current 25% margin. If achieved, that guidance would represent a meaningful inflection point in Megaport’s operating leverage profile and go a long way toward addressing market concerns about the widening gap between EBITDA and statutory net profitability.
Analysts Bullish, With Caveats
The sell-side community has largely shrugged off the short-term technical weakness, maintaining a strongly constructive view on Megaport’s 12-to-24-month outlook.
Morgans upgraded the stock to a Buy rating following the results, attaching a price target of A$25.00, implying approximately 50% upside from current levels. UBS reaffirmed its Positive rating and lifted its target price to A$26.40, projecting EBITDA could reach A$624 million by FY28. Across the broader analyst community, 14 of 16 covering analysts hold a Buy or Strong Buy rating, with the consensus price target sitting in the range of A$26.02 to A$26.24.
What Next?
The bull case rests on the premise that markets are currently mispricing Megaport by focusing on near-term statutory losses and capex commitments rather than the contracted revenue backlog and the structural shift in the company’s earnings quality as AI infrastructure revenues scale. Analysts describe the 23%-plus pullback from peak levels as a classic post-results reset, driven by short-term profit-taking rather than any deterioration in the underlying business fundamentals.
The bear case, while a minority view among institutional analysts, is not without merit. Megaport trades at elevated valuation multiples, EV/EBITDA above 100 times on a trailing basis and a price-to-earnings ratio above 60 times, leaving the stock highly sensitive to any shift in macro conditions, interest rate expectations, or execution risk on its AI contract pipeline.
Plenty to debate for both sides from here, with the macro backdrop, and broader risk sentiment also likely to play a key role in what happens next.
