Megaport Shares Jump 193% in Two Months: What Is Going on at MP1?

Megaport shares (ASX:MP1) have catapulted into the spotlight in recent months, with the rally pushing MP1 to a crown that could put a pause on momentum. The shares are now the most technically overbought stock on the Australian Securities Exchange, with shares rocketing 193% over two months to close at A$19.04 on Tuesday, a move that has left analysts scrambling to reconcile explosive AI-driven momentum with valuation caution.

The MP1 share price closed out Tuesday’s session up 3.03%, on volume 1.76 times its average daily turnover, capping a parabolic move that has pushed its Relative Strength Index to 91.06, well into territory that typically signals exhaustion. The rally marks a dramatic transformation for a stock that, until recently, was known primarily for software-defined interconnection services rather than cutting-edge artificial intelligence infrastructure.

At the heart of the rally lies a strategic pivot announced in early June: Megaport revealed it had secured four major GPU contracts and would raise approximately A$827 million through a fully underwritten entitlement offer to fund a globally distributed AI inference cloud. The 1-for-3.08 pro-rata offering, one of the largest equity raises in Australian technology this year, will finance the acquisition and deployment of GPU clusters across Megaport’s existing footprint of more than 1,100 data centres worldwide.

The capital raise followed a May 14 announcement that sent shockwaves through the market: Megaport’s subsidiary Latitude.sh had signed three binding contracts with two US-based AI companies worth a combined A$254 million in total contract value. Roughly 90% of that value is locked into two 36-month agreements, with the remainder spread over 24 months, covering GPU, CPU, network, and storage infrastructure. The deals substantially increased Megaport’s annual recurring revenue backlog and prompted management to tighten fiscal 2026 revenue guidance to a range of A$307 million to A$315 million, up from previous expectations.

Markets interpreted the contract wins as validation that Megaport’s network could serve as the connective tissue for AI workloads at scale, transforming the company from a connectivity utility into a vertically integrated AI infrastructure provider. Ord Minnett responded by lifting its price target from A$12 to A$14.50 shortly after the announcement, citing improved earnings visibility and the strategic value of the contracts. Other brokerages echoed the upgrade, framing the deals as Megaport’s largest-ever customer commitments and a material step-change in the business model.

What Does the Overbought RSI Mean?

For those not familiar with technical analysis, or the relative strength index (RSI), an RSI above 90 is historically associated with blow-off moves that precede sharp corrections, particularly when coupled with heavy equity issuance. Megaport’s November 2025 placement of A$200 million at A$14.30 per share was already substantial; the June raise more than quadruples that dilution in a matter of months, raising questions about whether returns on the newly deployed capital will justify the cost to existing shareholders. Whilst heavily overbought RSI is not a sign in itself that momentum cools, many institutional buyers will look for a good entry when accumulating positions, and an RSI at this level usually signifies paying a premium for buyers.

The fundamental news of contracts can cause stocks to trade in an overbought range for extended periods, although markets will usually see them cool off before the next move. Parabolic moves such as those at Megaport are exciting, and dramatic, yet it is also important to avoid FOMO.

The bulk of the A$254 million contract value is tied to just two US AI customers, meaning any shift in their funding, strategy, or competitive positioning could materially impact Megaport’s revenue trajectory. While management has emphasised the recurring nature of the contracts and the robustness of demand, it has also cautioned that guidance is not guaranteed, leaving room for disappointment if AI adoption or infrastructure utilisation ramps more slowly than the current share price implies.

The stock has become something of a local focal point for thematic capital seeking exposure to artificial intelligence outside the usual mega-cap technology names, creating a self-reinforcing loop of positive headlines, price spikes, and further inflows.

What Lay Ahead

From a fundamental perspective, the tightened revenue guidance and contracted backlog do provide a degree of earnings visibility that was previously absent. Megaport’s annual recurring revenue had grown into the mid-A$260 million range by December 2025, supported by network expansion and partnerships. The AI contracts and GPU strategy represent an acceleration of that trajectory, with the potential to unlock higher-margin workloads as inference demand scales globally.

However, the valuation debate remains unresolved. At A$19.04, Megaport shares trade at a significant premium to its historical multiples, a premium that assumes flawless execution, sustained AI infrastructure demand, and minimal competitive or operational setbacks. The stock’s technical setup, marked by extreme overbought conditions and a near-vertical two-month chart, suggests that any negative surprise, whether operational, financial, or macroeconomic, could trigger a sharp unwinding of speculative positions.

Bulls continue to argue that Megaport has positioned itself at the nexus of two powerful secular trends, and that the company’s global network provides a defensible moat that justifies a re-rating. They point to the underwritten nature of the equity raise as evidence of institutional confidence and note that the contracted revenue de-risks near-term forecasts. Bears counter that the stock has run too far, too fast, on a strategy shift that remains unproven at scale, and that the dilution from repeated equity raises will weigh on per-share returns even if the AI investments succeed.

For now, Megaport shares wear the unwanted crown of the ASX’s most overbought, a title that on one hand is positive, reflective of the market’s enthusiasm for its AI pivot, yet that also brings mounting scepticism that such a parabolic move can be sustained without a pullback, or some cooling off.