Are Megaport shares a must buy for the AI boom?

MP1 appears quite attractive as it is taking advantage of AI boom with multiple contracts secured and growth led positive outlook.

Megaport Limited (ASX: MP1) is one of the leading AI based ASX stocks which is currently trading with a market capitalisation of $4.99B.

New contract acquisition

MP1 had announced on 29 September 2026 that it has secured three new AI infrastructure contracts through its wholly owned subsidiary, Latitude.sh. It has a combined total contract value (TCV) of ~$978.6M. It includes the GPU and CPU compute, network, and storage for AI applications and inference workloads. It is expected to contribute ~$232.4M in Average Recurring Revenue (ARR). Megaport has secured power and space for the new strategic customer contracts.

One new customer is making a prepayment of ~$281.5M prior to the delivery of the service, which the customer has committed to in order to gain rapid access to the GPUs already ordered for the GPU pool. The funds received through prepayment will be utilised to cover the majority of cash capital expenditure  required to fulfil the contract. The new customer acquisition will reduce the overall concentration risk and diversify the customer base.

Group pro forma annual recurring revenue has now reached $1.1B. The contracts require the capital expenditure of $500.3M, primarily due to high performance NVIDIA GPU, compute, network and storage hardware.

Megaport has increased its debt facility to $845M, with total liquidity sources reaching ~$2.2B and pro forma liquidity of $362M.

The compute ARR has increased by 90% to $201.4M from $105.9M as at 30 June 2026 and 227% since the acquisition. The strategic contract ARR also increased to $96.3M from $14.9M at 30 June 2026.

MP1 had also announced on 20 August 2026 that it has secured a new portfolio of major infrastructure contracts through its wholly owned subsidiary, Latitude.sh. These contracts will provide the AI infrastructure including GPU and CPU compute, network, and storage capacity for multiple customers, further expanding Megaport’s role in supporting AI applications and inference workloads.

The contracts have a combined TCV of ~$506.2M, representing ~$129.2M in ARR. The contracts requires an incremental capital expenditure of $291.8M, primarily used to acquire NVIDIA GPU, compute, network and storage hardware.

FY26 Results

MP1 had announced on 20 August 2026 its FY26 results for the period ended June 2026. Group revenue increased by 37% YoY to $312.2M and the incremental ARR rose by 103% YoY. The network ARR surged by 27% c.c. YoY to $289.6M and network NRR grew by 5pp YoY to 114%. The compute ARR also increased  by 72% since acquisition to $105.6M.

It has reported an EBITDA of $77.1M, up 24% YoY and reported an EBITDA margin of 25%, exceeding the FY26 guidance. MP1 has reported a capex of $152.6M. The closing cash balance increased by 327% YoY to $435.4M.

Outlook

MP1 has delivered strong performance over the period, supported by solid core business growth. The company has updated its guidance for FY27. It is now expected to generate $720M-$810M in FY27, with $395M-$475M coming from compute revenue and $325M - $335M coming from network revenue. It has also updated its group EBITDA margin from previous guidance of 38%-40% to now 42%-44%. The group capex is expected to be $1.78B - $1.88B in FY27, exceeding the top end of previous guidance.