Megaport Lands Major AI Infrastructure Contract
Megaport (ASX:MP1) shares touched A$9.73 during a 9% intraday rally on Monday before closing up 5% at A$9.34 after the company landed a major new contract through its Latitude.sh business. The three-year deal is worth A$35.4m and comes from a fast-growing US tech company that builds tools for enterprise AI customers. For a stock that has been beaten down for most of the past year, this is the kind of news shareholders have been waiting for. But before getting too excited, it is worth asking whether this win really marks a turning point or just another short-lived bounce.
Why This Contract Is a Big Deal for Megaport
The win matters for two reasons. First, it locks in steady, recurring income for three years, which is exactly what investors want to see in a tech business that has historically prioritised growth over short-term profits. Second, it isn’t a one-off. Latitude.sh’s compute revenue was already growing strongly before this deal, and Megaport’s core network business is picking up speed too.
The customer is also exactly the type Megaport wants. It’s a high-growth tech firm building products for enterprise AI demand, the area most experts agree will drive the next decade of tech spending. To support the contract, Megaport will spend around A$17.2m on new CPU server hardware. The investment fits neatly alongside the company’s existing FY26 capex plan of A$90m to A$100m, signalling disciplined capital allocation rather than reckless spending.
Management says the cost should be paid back within 24 months, and the hardware will stay on the platform after the contract ends. We believe this is the clearest sign yet that Megaport’s pivot towards AI infrastructure is starting to work. The company isn’t just talking about AI anymore. It’s getting paid for it.
So Why Are Megaport Shares Still Down So Much?
Even after Monday’s rally, Megaport shares are down 17% over the past year while the broader market has climbed 10%. The reason comes down to one issue: profits.
Megaport is still spending heavily on growth, including the Latitude.sh acquisition, which only completed five months ago. In the current market, investors have been quick to punish tech stocks that are not yet posting bottom-line profits, even when revenue growth is strong.
But the picture is improving. Back in February, Megaport raised its full-year revenue guidance and pointed to stronger margins ahead. Yesterday’s contract adds another layer of stable, predictable income on top of that. In our view, the bears are slowly running out of arguments.
The Investor’s Takeaway
For long-term growth investors, yesterday’s news takes some of the risk out of the Megaport story. The company is no longer just promising AI-driven growth. It’s now signing real contracts to deliver it and backing those contracts with disciplined, customer-led capital.
The stock isn’t cheap, since profits are still some way off. The next big test comes in August, when Megaport reports its full-year results. That update should show whether margins are heading the right way. For investors who can handle volatility, Monday’s move looks like a meaningful step forward. More cautious investors may prefer to wait for August before adding.
