Megaport Shares Put Early Year Struggles To Bed, Up 48% on Month

Megaport shares (ASX: MP1) have rallied strongly in recent weeks, adding 48.13% over the past month, propelled by a A$254 million AI infrastructure contract win that has transformed market perception of the network-as-a-service provider into a credible artificial intelligence compute play.

The Megaport share price closed 1.71% higher on Friday despite volume running at just 0.53 times the average daily turnover, a technical signal that supply has tightened dramatically following the recent rally. With the relative strength index now sitting at 77.66, firmly in overbought territory, the stock’s momentum phase is building steam.

Driving The Rally

The catalyst behind the surge arrived in mid-May when Megaport announced three major AI compute, network and storage contracts through its US subsidiary Latitude.sh, with a combined value of US$182.9 million. Management described the wins as a “defining moment” for the company’s push into AI infrastructure, validating its strategy of moving beyond pure connectivity services into owning and monetising the compute layer for AI customers.

The contracts represent substantial scale relative to Megaport’s financial base. Against FY25 revenue of approximately A$227 million and FY26 group guidance of A$302–317 million, the US deals, even when recognised over multiple years, provide meaningful forward revenue visibility and underpin accelerating annual recurring revenue growth.

Critically, management reaffirmed existing FY26 guidance when announcing the contracts, explicitly noting that the A$90–100 million capex guidance range was set before incorporating the full capital requirements of the new deals. That commentary has allowed bulls to argue credibly that embedded upside exists for future guidance revisions once deployment timelines crystallise.

The AI contract announcement followed a volatile period for Megaport sentiment. In February, the company posted record half-year results to 31 December 2025, with group ARR jumping 49% year-on-year to A$338 million and revenue rising 26% to A$134.9 million. The core Megaport Network business delivered 19% ARR growth in constant currency terms to A$263.4 million, alongside a net revenue retention rate of 111% and materially longer customer lifetimes.

However, a guidance clarification issued shortly after the result, correcting an incorrect foreign exchange assumption from A$0.65 to A$0.70 per US dollar triggered a 16% intraday sell-off on 23 February. The episode reinforced existing concerns about capital intensity, FX sensitivity, and communication quality, with management itself highlighting that roughly A$9 million of revenue swings with each A$0.05 movement in the AUD:USD exchange rate.

That February drawdown created technical room for the subsequent squeeze. When the AI contract news arrived, it not only repaired the credibility gap around Megaport’s acquisitions and growth ambitions but also triggered short covering and momentum buying, producing the current one-month rally.

Network ARR including the Indian internet exchange acquisition reached A$272 million at 31 March 2026, up 23% year-on-year in constant currency, demonstrating that underlying growth remained robust even before layering in the new compute contracts. The Latitude.sh platform, acquired as part of Megaport’s strategic pivot, is now generating material contracted revenue rather than representing speculative optionality.

What Next For MP1

The stock’s current technical setup with an overbought RSI, strong trend, and rising prices on below-average volume resembles a momentum continuation phase rather than distribution. The absence of heavy selling on up-days indicates that holders are content and weak hands have exited, though it also implies liquidity risk on the downside should sentiment reverse.

The light volume on Friday’s gain, at just over half the daily average suggests the marginal buyer remains price-insensitive, likely a combination of momentum strategies responding to the technical breakout and discretionary investors willing to pay up for exposure to the AI infrastructure theme. That dynamic can persist during strong sentiment phases but also means the stock is vulnerable to sharp reversals if execution stumbles or macro conditions deteriorate.