Australia's NEXTDC inks MoU with OpenAI to develop AI infrastructure in Sydney, shares jump

By Kumar Tanishk and Adwitiya Srivastava

Dec 5 (Reuters) - NEXTDC Ltd NXT.AX said on Friday it inked a memorandum of understanding with ChatGPT maker OpenAI to collaborate on the development of a hyperscale AI campus and graphics processing unit supercluster in Sydney, boosting its shares.

Shares of the Queensland-headquartered data centre operator rose as much as 10.9% to A$14.900 by 2312 GMT, its highest level since November 13.

The stock was the top gainer on the broader benchmark .AXJO index, which fell 0.3%.

The project will be located at its S7 site at Eastern Creek in Sydney, purchased last year for nearly A$353 million ($233.37 million), with a potential capacity of 550 megawatts.

The deal falls under OpenAI's Australia program, part of its economic blueprint aimed at boosting AI adoption and infrastructure investment.

It comes as a seemingly insatiable appetite for AI has triggered a rush into data centre investments globally, helping operators like NEXTDC ride the wave.

Sydney, too, has unveiled a roadmap to enhance AI adoption in its economy, diverging from earlier plans for tighter regulations on high-risk scenarios.

NEXTDC last week lifted its FY26 capex guidance by A$400 million to a range of A$2.2 billion to A$2.4 billion, as it accelerates inventory expansion to build and deploy capacity for new contracts.

"This is a significant step for NEXTDC," said Michael McCarthy, CEO of AU & NZ at trading platform Moomoo, adding that a foundation client in OpenAI means the company can press ahead with a project aligned with government intentions for AI and productivity.

"The guaranteed revenue stream will likely see investors queueing to get involved."

However, McCarthy flagged two potential sticking points: copyright issues around training OpenAI's large language models and power costs.

"The deal fits nicely with current market narratives around AI, and NEXTDC shares could spike today, but the glee with which investors may greet this deal could sour over time as reality bites," he said.

($1 = 1.5126 Australian dollars)