Data Center Bloodbath Spreads Down Under: Nextdc Implodes 45%, Mulls Force Majeure As Angry Residents Pull The Plug
Data Center Bloodbath Spreads Down Under: Nextdc Implodes 45%, Mulls Force Majeure As Angry Residents Pull The Plug
And another one goes down.
One day after we reported that Korea's biggest IPO of the year cratered 32% within seconds , and two weeks after Nvidia-backed Firmus slashed and then pulled its ASX float , another Australian data center operator has just smashed into the cold, hard wall of reality. This time the casualty is an ASX-listed heavyweight: according to Bloomberg , Nextdc (NXT AU) said it is considering force majeure options and cut earnings guidance by more than a third after community opposition delayed power to M3, one of its major projects in Melbourne.
And it didn't stop there: the company is also reviewing its entire capex program and placing all new development projects and land acquisitions on hold . The stock, fresh out of a two-day trading halt, plunged as much as 45% in Sydney to A$5.07, dragging the rest of the local sector with it, and is now back where it traded in 2019.
CEO Craig Scroggie didn't mince words on the investor call: " We are not going to continue any work on any sites that don't have an existing customer commitment. " Which, in the middle of what was supposed to be the biggest data center buildout in Australian history, is quite the sentence.
Residents 1, Data Center 0
The story behind the collapse is almost comically low-tech. To power up M3, network operator Jemena Electricity Networks needed to run high-voltage transmission poles through the inner-city residential streets of Maribyrnong in Melbourne's west. The locals had other ideas: in September, residents blockaded the work trucks with their cars and filled in the excavation pits , and Jemena paused the works citing "safety concerns and lack of access to work sites due to community and stakeholder opposition to the work." It does not expect to restart before February 2027, and the next grid supply increase to M3 has now slipped into FY2028.
Meanwhile, the local council is withholding consent pending "further community consultation," and the planning decision on M3 Stages 6 and 7 has been kicked to 2027, conveniently after Victoria's state government enters caretaker mode on Nov 3 ahead of the Nov 28 election. Because nothing says "approve my high-voltage power line" like a looming election.
Here is what that did to the numbers, per the company's ASX filing:
FY27 net revenue cut to A$475-500 million from A$615-640 million
FY27 underlying EBITDA slashed to A$245-265 million from A$385-410 million, a 36% cut at the midpoint
FY27 capex trimmed to A$4.5-5.0 billion from A$5.25-5.75 billion
The new guidance strips out roughly A$140 million of revenue and EBITDA from the affected M3 contracts, including capacity that is already billing , and the company warns that service-level credits owed to the customer could push EBITDA even lower. Hence the force majeure language: Nextdc said it is "considering whether relief is available to it under the force majeure and other relevant provisions of those contracts." The board is also weighing selling development sites "not required in the near term" which, translated from corporate, probably means we bought more land than we can plug in.
Scroggie, for his part, framed it as an industry problem: "There is very little capacity available anywhere, not just in Melbourne or in Australia, anywhere in the world. And even finding five megawatts of data center capacity today is a huge challenge." Which is probably true, and also a fairly strange pitch for a company that just told the market it can't even energize the capacity it already sold.
Funding Was Always The Handbrake
The timing is a little awkward for the Street, which loved the Australian AI infrastructure story right up until this morning. Just eight days ago, Goldman's Chris Boulus and team launched a massive initiation on the region's digital infrastructure in " ANZ Data Centres – Initiating our Supply-Demand Model " ( available to pro subs ), projecting ANZ IT load demand scaling to 5.2GW by 2030, leaving a 0.7GW supply shortfall and kicking off what the bank's desk called "an enormous A$50-65bn capex supercycle."
Note the right-hand panel: most of the 2030 capacity Goldman models is still under construction, in planning or merely "announced," with the bank assigning delivery risk to every one of those buckets. As of today, at least one "under construction" project in Melbourne needs a bigger risk haircut.
But here is the thing: Goldman was not blind to the risk, and it was precisely Nextdc that the bank singled out. While it initiated Goodman Group and Megaport at Buy, it started Nextdc at only Neutral, with a A$11 target, because, as Goldman's desk summarized it, " while the street loves the broad demand story, GIR Chris cautions that funding is the actual handbrake. " Boulus modeled FY28/29 EBITDA 3-5% below consensus and flagged " a looming A$1bn+ funding shortfall ," with the desk adding that "total focus is on the resolution of their funding pathway—will we see a de-risking capital joint venture, or a potentially dilutive equity raise?" The report itself warned that " capital access [is] emerging as a critical bottleneck ," and the winners will be operators "with managed fund platforms or self-funding capabilities."
Well, the capital question just got a lot harder to answer. On paper Nextdc still has A$8.7 billion of liquidity, including A$6.7 billion of undrawn senior debt, and says it remains covenant compliant. The fine print, however, warns that a material change in billing profiles (such as, say, the M3 delays) could limit its ability to draw on those senior facilities . And according to UBS forecasts cited by Market Index, Nextdc was already expected to stay loss-making until at least FY31, with long-term debt swelling from A$3.3 billion to a peak of A$11.2 billion in FY30. As one local commentator put it, " the problem with data centre developers is that they're massive debt junkies. "
The stock now trades about 48% below Goldman's "Neutral" target... a target set before a third of FY27 EBITDA went up in smoke. Even after today's crash, Market Index estimates Nextdc trades at roughly 37x FY27 EV/EBITDA, vs 22x for the average global pure-play peer per Goldman, and that is before the latest A$1.1 billion of convertible notes. In other words, as Market Index put it, Nextdc "could fall 40% and still only trade in line with global peers."
Others were quick to generalize the lesson. RBC called the M3 delay "evidence that community concerns around data center developments present a real risk to the timing of delivery of contracted capacity for data center owners," while Citi's head of Japan, North Asia and Australia banking, Mark Luet, told Bloomberg TV that investors will be "more discerning" going forward, before adding, "we don't for a moment doubt that this thematic of AI infrastructure will continue." Spoken like a true banker with a pipeline to fill.
Force Majeure Is Now A Data Center Feature
If the phrase "data center force majeure" sounds familiar, that's because we have heard it before, a month ago. On Sept 24, Oracle sent a force majeure notice over its massive Project Jupiter campus in New Mexico , citing permitting delays and an inability to power up the site, and two weeks later we learned it was trucking natural gas to its AI data centers just to keep the lights on. Back then, Barclays assured clients the notice was "neutral from a credit perspective." We disagreed, and this was our take at the time:
Hey guys, you are right: the force majeure by itself does not change delivery expectations. You just have to pay the rent until the delivery actually takes place. Contractually. https://t.co/rj721cRTu9
— zerohedge (@zerohedge) September 25, 2026
Then came Finland, which ordered Google to halt work at two data centers in what we dubbed " Forest Majeure " (Oct 6). Now it's Melbourne. The common thread in each case is the same: the GPUs are there and the customers are there (for now), but the electrons (and the neighbors' permission) are not .
Nor is this an Australian quirk. Bloomberg notes that in the US, at least 106 server-farm projects representing about $198 billion of investment were blocked or delayed amid local opposition in the first half of this year alone, per Data Center Watch. Morgan Stanley put the damage even earlier at " $156 billion of data center projects canceled or delayed in 2025, and $130 billion in 1Q26 ," warning that "sustained data center pushback could ultimately extend the cycle and reduce future supply," as we noted when Wells Fargo flagged a fourfold jump in active moratoriums . Texas has since ordered a halt to new data centers outright.
We have been warning about this since this time last year , when the local pushback against data centers was still a curiosity, and by November we were writing that Americans were starting to revolt . A year later the revolt has gone global, and as we put it last week, demand for compute keeps rising...
Jevon is an offset and total demand is rising… until it hits physical constraints of hundreds of delayed or canceled data centers.
— zerohedge (@zerohedge) October 14, 2026
Bring Your Own Power Plant (Or Don't Bother)
Which brings us to the obvious fix, the one we have been pounding the table on for a year: if you want to plug a city's worth of load into an already-strained grid, bring your own power plant , and don't route high-voltage lines through someone's front yard. Australia's government more or less said the same thing in July, when it slapped mandatory national rules on AI data centers requiring operators to "fully fund their power needs and underwrite new electricity generation."
Goldman has since come around too. In its 50-page Carbonomics report on behind-the-meter power, which we covered in detail last month, the bank's Michele Della Vigna raised his BTM forecast to 67GW by 2030, with on-site gas turbines, reciprocating engines and fuel cells supplying 25% of global data center power demand by 2030 vs "effectively 0%" in 2025 . The reason: grid connection times have stretched from about two years historically to 7+ years today , per engine maker INNIO, while a data center itself takes just 2-3 years to build.
M3 is a textbook case: the building is (mostly) there, the customer is there, and the missing piece is a 66kV augmentation that local residents managed to stop with their cars and some shovels.
And there's a macro irony here too. Overnight, RBA Deputy Governor Andrew Hauser flagged " a boom in data centre construction here in Australia " as one of three upside risks to inflation, prompting Goldman's Australia economists to scrap their on-hold call and now expect a 25bp RBA hike to 4.85% in November . Translation: the data center boom is now pushing up the cost of capital for... data centers . For an industry where, as Goldman warned, funding is the handbrake, that is hardly ideal.
The Casualty List Grows... Again
Nextdc is the first already-listed operator to end up on our tally of data center wipeouts, which has now grown to eight entries in a month . And just as we were putting this post together, Bloomberg reported that DayOne, Firmus' Batam partner which was set to start marketing its up-to-$5 billion US IPO as soon as today, is now "weighing options." Usually that means the IPO is probably getting quietly shelved.
*DAYONE IS SAID TO MULL OPTIONS FOR US IPO AMID DATA CENTER ROUT
— zerohedge (@zerohedge) October 21, 2026
So with these two in the rearview mirror, here is the updated scorecard:
When The Neighbors Hold The Off Switch
The bull case for AI data centers has always rested on one assumption: that demand for compute is so overwhelming that every megawatt built gets filled. Nextdc's CEO said as much this morning, and he is probably right about the demand. What today showed is that the binding constraint sits elsewhere: in permits, power lines, and the patience of the people who live next to them . Firmus and Elice showed the public market won't pay up for the buildout; Nextdc shows that even a funded, contracted, half-built project can lose a third of its earnings when residents decide they've had enough.
Goldman flagged funding as Nextdc's handbrake eight days ago. As of this morning, the handbrake has a second lever, and it's held by the residents of Maribyrnong. The board will present the results of its capex review at the AGM on Nov 20, and we suspect the "potential sale of development sites" won't be the last asset to go on the block.
Much more in the full Goldman " ANZ Data Centres – Initiating our Supply-Demand Model ", available to pro subs .
Tyler Durden
Tue, 10/20/2026 - 22:49