Up 148% since April, should I still buy Megaport shares today?

Brave investors who waded in and bought Megaport Ltd (ASX: MP1) shares in April will be sitting on some outsized gains today.

Indeed, if you heeded Warren Buffett’s investment advice to “be greedy when others are fearful” and bought the S&P/ASX 200 Index (ASX: XJO) network services company at its one-year closing lows on 10 April, you’ll be sitting on a 147.5% gain today.

That’s enough to turn a $5,000 investment into $12,377. In less than two months.

Now you can’t actually buy Megaport shares today. Or at least not at time of writing.

As you may be aware, the ASX 200 tech stock entered a trading halt on Tuesday. Shares closed up 7.0% on Monday at $16.61 apiece.

And that’s where they are still at in late morning trade on Thursday, as the shares remain frozen while Megaport conducts an $827 million capital raising via a fully underwritten entitlement offer.

Atop that cap-raise announcement, yesterday, Megaport reported that it had signed four new AI infrastructure contracts valued at $459 million.

The company also narrowed its full year FY 2026 revenue guidance range to between $307 million and $315 million.

Which brings us back to our headline question…

Should I still buy Megaport shares after their huge surge?

Medallion Financial Group’s Philippe Bui analysed the outlook for the surging ASX 200 tech stock late last week, prior to this week’s announcements (courtesy of The Bull).

“MP1 is a leading global network-as-a-service provider, connecting enterprises to cloud providers and data centres,” he said.

And Megaport is among the ASX 200 tech stocks that are benefiting from the rapid rise of AI.

“Artificial intelligence-driven data centre investment is a direct tailwind, and this business is capturing it,” Bui noted.

As for the company’s performance, Bui said:

Revenue quality is improving, margins are expanding and existing customers are spending more. Wholly owned subsidiary Latitude.sh secured three major contracts in May, representing a meaningful step forward in recurring revenue.

While Bui sounded optimistic about the potential for more gains, he issued a hold recommendation on Megaport shares for now.

“At current prices, in line with historic valuation averages, emerging upside doesn’t appear fully priced in,” Bui concluded.

What’s the latest from the company’s Latitude.sh subsidiary?

Megaport shares closed up 4.5% on 14 May, with even larger share price gains over the following two trading days, after the company announced the three contract wins from Latitude.sh that Bui mentioned above.

The GPU, CPU, network, and storage contracts were reported to be worth a combined total contract value (TCV) of $254 million. That works out to around $91 million in Annualised Recurring Revenue (ARR).

The post Up 148% since April, should I still buy Megaport shares today? appeared first on The Motley Fool Australia.

More reading

• How high does Macquarie think Megaport shares will go?
• 5 things to watch on the ASX 200 on Thursday
• Why is everyone talking about Megaport, Ampol and Northern Star shares on Wednesday?
• Megaport shares in focus amid $458.9m AI contract wins and capital raising
• Megaport secures 4 new AI contracts, announces capital raise

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.