Megaport Ltd (ASX: MP1) shares will be out of action on Wednesday.
The network services company requested a trading halt while it undertakes a major capital raising.
What did Megaport announce?
This morning, Megaport announced four new artificial intelligence (AI) infrastructure contracts with a combined total contract value of approximately $458.9 million.
These contracts relate to AI inference workloads and are expected to commence in the first half of FY 2027.
The company revealed that the contracts will require approximately $369.5 million of capital expenditure, mainly for high-performance NVIDIA GPUs, as well as network and storage infrastructure.
Megaport also plans to establish an on-demand GPU Pool, supported by $350 million of investment.
This will allow enterprise customers to access AI infrastructure through both contracted and consumption-based commercial models.
Why is this important?
Megaport is positioning itself to build what it calls a Globally-Distributed AI Inference Cloud.
This essentially means providing the infrastructure that companies need to run AI applications closer to their customers.
This is important because AI inference workloads often need low latency. Megaport believes its footprint of more than 1,100 connected data centres across 31 countries gives it an advantage in supporting these workloads.
The company notes that demand for GPU-based compute is currently outstripping supply as enterprise AI adoption accelerates.
Commenting on the news, Megaport’s CEO, Michael Reid, said:
AI inference represents one of the biggest infrastructure opportunities of the next decade. The contracts announced today reflect the accelerating demand for globally-distributed AI inference infrastructure. Megaport’s software-provisioned compute, network, and storage platform positions us strongly to meet that demand.
AI inference is becoming a global infrastructure challenge, not simply a GPU problem. As AI adoption accelerates, organisations need seamless access to GPUs, CPUs, storage, and the connectivity that powers them. Megaport is built to deliver it all.
Capital raising
To fund the contracts and the GPU Pool, Megaport is undertaking a fully underwritten entitlement offer to raise $827.3 million.
Eligible shareholders will be able to subscribe for one new share for every 3.08 existing shares held.
The new Megaport shares will be issued at $14.30 per share. This represents a 13.9% discount to Megaport’s last closing price of $16.61 on Monday.
The proceeds will be used to fund hardware for the new contracts, establish the GPU Pool, cover transaction costs, and provide balance sheet flexibility for future growth opportunities.
Trading update
Megaport also provided a trading update this morning.
It advised that its network annual recurring revenue increased 25% year on year on a constant currency basis to $277.7 million in April 2026.
Including the new strategic contracts, its Compute division has pro forma annual recurring revenue of $385.2 million. This lifts total group pro forma annual recurring revenue to $662.9 million.
The company has also tightened its FY 2026 revenue guidance range to between $307 million and $315 million.
Its FY 2026 EBITDA margin and group capital expenditure guidance remain unchanged.
Megaport shares are expected to return to trade on Friday.
The post Megaport shares in focus amid $458.9m AI contract wins and capital raising appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has positions in Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.