Are Megaport shares a must-buy for the AI boom?

Megaport Ltd (ASX: MP1) shares have had an extraordinary run in 2026.

The stock is trading around $21.12 on Wednesday, up over 75% for the year after investors responded enthusiastically to a string of major artificial intelligence (AI) infrastructure deals.

Does this mean Megaport shares are one of the ASX stocks to own for the AI boom?

Megaport has become a different business

For years, Megaport was primarily a connectivity story. Its network enables businesses to connect quickly across data centres, cloud providers, and other digital infrastructure worldwide.

I still think the business has a strong future as companies use more cloud services and move greater amounts of data between different locations.

But the acquisition of Latitude.sh has added a completely new dimension.

Latitude.sh gives Megaport direct exposure to AI compute through GPU and CPU infrastructure. Instead of simply connecting customers to the infrastructure they need, Megaport can now provide some of that computing capacity itself.

That puts the company closer to the enormous spending currently taking place around artificial intelligence.

And early demand suggests the opportunity could be substantial.

Megaport recently announced three additional strategic AI infrastructure contracts worth approximately $979 million, taking the value of strategic contracts announced since April to around $2.3 billion. Once those contracts are fully deployed, the company expects group annual recurring revenue to reach roughly $1.1 billion.

For me, that is when the AI story becomes much easier to take seriously.

Why AI inference could be important

Much of the attention around AI has focused on the enormous data centres required to train increasingly powerful models.

But models also require computing power every time somebody actually uses them. This is known as inference, and demand should increase as AI becomes embedded in more software, businesses, and everyday applications.

Bell Potter believes Megaport is particularly well placed here.

The broker recently described the company as offering “one of the few direct exposures on the ASX to a neocloud provider”, with particular exposure to growing inference demand.

Megaport is building a distributed compute network rather than trying to construct enormous AI data centres itself. That potentially gives it a more flexible way to participate as demand develops across different markets.

Its relationship with NVIDIA is another positive. NVIDIA recently named Megaport among the Australian partners it is working with to expand AI infrastructure, which Bell Potter believes could improve Megaport’s access to GPUs and help it win AI-native customers.

Bell Potter sees much more growth ahead

The scale of the earnings growth Bell Potter expects is striking.

The broker forecasts underlying EBITDA increasing from $77 million in FY26 to $329 million in FY27 and $726 million in FY28, with much of that growth supported by strategic contracts already being rolled out.

Bell Potter has consequently initiated coverage with a buy rating and a $27 price target.

From the current Megaport share price of around $21.12, that would represent potential upside of roughly 28%.

I would not buy purely because a broker has put a higher price target on the stock. But I think those forecasts help illustrate just how dramatically Megaport’s earnings profile could change if it successfully delivers the business already contracted.

What could go wrong?

There is plenty of execution required. Megaport has signed enormous contracts, but it now needs to deploy the infrastructure, secure the necessary hardware, and turn those agreements into recurring revenue and profits.

AI infrastructure is also evolving extremely quickly. Competition could increase, technology could change, and today’s exceptionally strong demand may not develop exactly as investors currently expect.

After the share price rally this year, expectations are also much higher. Any delays or weaker contract momentum could produce some sharp volatility.

Foolish takeaway

I think Megaport shares are among the most compelling ways to gain direct exposure to AI infrastructure on the ASX.

I would be comfortable buying shares around $21.12, provided I was prepared for a bumpy ride as this much larger business takes shape.

The post Are Megaport shares a must-buy for the AI boom? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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 and Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.