NextDC shares (ASX:NXT) opened the week on the back foot, shedding more than 3% to post its lowest closing price in over 12 months, in a move that also brought up an oversold signal.
The NextDC share price started the week by falling 3.35% to close at A$10.98, dipping below the psychologically significant A$11.00 support level that had been closely watched. The move pushed the stock’s Relative Strength Index to 29.26, officially entering oversold territory. The latest pullback sits within a more troubling trend that has seen holders face a 26% drop in the past five weeks, as ASX tech stutters.
Driving NextDC Shares Lower
At the heart of the pullback is a tension that is all too familiar to high-growth infrastructure plays when the gap between capex today and cash flows of tomorrow are in question. The company’s most recent full-year financials revealed record annual capex of A$3.397 billion, with guidance for FY27 capex climbing even further to a range of A$5.25 billion to A$5.75 billion.
That is an extraordinary level of investment for any ASX-listed company, and it reflects management’s conviction that the structural demand wave driven by artificial intelligence workloads, enterprise cloud migration, and hyperscaler expansion across Asia-Pacific is real, durable, and worth betting heavily on.
Top Australian Brokers
- Pepperstone - Top Australian broker - Read our review
- eToro - Invest in ASX and international shares - Read our review
The operational metrics support that conviction to a degree, as utilisation surged 202% to 740.1 megawatts, and the company’s forward order book now stands at 565 MW, representing more than three times its current billing capacity. Revenue rose 16% to A$496.5 million for the period, and management has issued FY27 guidance of A$615 million to A$640 million in revenue alongside underlying EBITDA of A$385 million to A$410 million, implying earnings growth in excess of 50% over the forecast horizon.
Despite this, valuation remains a point of debate, with the stock trading on a trailing P/E of 90 times, a figure that stands in stark contrast to the global IT sector benchmark of approximately 18 times and even to data centre peer averages. High-multiple growth stocks are also some of the most sensitive to discount rate movements, and with bond yields remaining high, pressure has been unrelenting.
What Next?
From a technical standpoint, the breach of A$11.00 and the RSI reading below 30 will attract the attention of contrarian and value-oriented market participants who look for oversold conditions as potential entry signals. However, technical oversold readings are not guarantees of reversal, and in a downtrend of this magnitude, the risk of further selling pressure remains real until a catalyst emerges to shift the narrative.
Markets will be watching closely for evidence that the 565 MW contracted order book is converting to billed revenue on schedule, with any shift in the global interest rate environment potentially pivotal to what comes next. Oversold, and below all key moving averages, momentum is clearly with the bears for now, but could support be found before a retest of the 52 week lows at A$10.69?
