NextDC cuts guidance as power delays stall a Melbourne data center

What did NextDC announce?

NextDC, the largest publicly listed data center operator in Australia, lowered its guidance, meaning its own forecast for its coming results.

Why it matters: The company reduced its full-year earnings outlook and its revenue outlook. Its shares fell sharply on Wednesday after the news, according to reports.

NextDC also put off projects linked to M3, its flagship facility in Melbourne. The company said it had paused work that lacks signed customer contracts while revenue from M3 is delayed.

Why is power holding up the Melbourne site?

The delay comes down to electricity. M3 needs a bigger power connection before it can run at full scale.

That upgrade involves swapping old wooden poles for much taller concrete pylons. Local residents objected to the plan, and the upgrade has stalled.

Data centers use large amounts of electricity to run and cool their servers. A site can be built and still sit partly idle if its grid connection is not ready.

Why might it matter beyond Australia?

Big technology companies are spending heavily on data centers to train and run artificial intelligence systems. NextDC's setback shows that buildings and chips are only part of the job; reliable power matters too.

It is not clear whether other operators face similar local resistance. Reports so far describe the problem at this Melbourne site.

U.S. tech shares also fell on Thursday. The Nasdaq-100 slid 2.9%, and Nvidia (Nasdaq: NVDA) tumbled 4.4%. Those moves had many possible causes, and nothing so far links them directly to NextDC.

Microsoft (Nasdaq: MSFT) is scheduled to report quarterly results on Oct. 28 and Amazon on Oct. 29. Both spend heavily on data centers, and their updates may show whether power access is shaping their plans.