Could $10,000 invested in Megaport shares double by 2030?

Megaport Ltd (ASX: MP1) has quickly become one of the most exciting growth shares on the ASX.

Its expansion into artificial intelligence (AI) infrastructure has opened up an enormous new market, and recent contract wins suggest the opportunity could be much bigger than investors previously imagined.

But with the shares already enjoying a strong rally, how much upside could still be ahead?

Could a $10,000 investment in Megaport shares today realistically grow to $20,000 by 2030?

A business with much bigger ambitions

The first reason I think Megaport shares have the potential to double is how dramatically its business has changed.

Megaport originally made its name by helping businesses connect to cloud providers and data centres through its global network.

That remains a valuable business, particularly as companies continue moving more of their operations online and need reliable connections between different systems.

But the acquisition of Latitude.sh has taken Megaport into a much larger growth market.

Latitude.sh provides GPU and CPU computing infrastructure, along with networking and storage, allowing customers to run demanding AI workloads.

This gives Megaport direct exposure to the computing power required as artificial intelligence becomes more widely adopted.

And the early results have been impressive. Since April, Megaport has announced approximately $2.3 billion worth of strategic AI infrastructure contracts.

Those agreements have helped lift the company’s pro forma annual recurring revenue to around $1.1 billion, although not all of that revenue is being billed yet.

For me, this is an important development. Megaport has moved beyond demonstrating that demand exists. It now has substantial contracted business to deliver.

What could Megaport look like in 2030?

AI adoption is still developing, and the demand for computing infrastructure could grow substantially as more businesses put AI applications into everyday use.

Megaport is positioning itself to benefit from that spending through Latitude.sh, while its original connectivity business can continue expanding alongside the broader cloud computing market.

The combination could make Megaport a much larger digital infrastructure company by the end of the decade.

We are already seeing how quickly its financial outlook is changing. Following its latest contract wins, Megaport upgraded FY27 revenue guidance to between $720 million and $810 million, with an expected EBITDA margin of 42% to 44%.

If the company delivers on those expectations and maintains strong momentum into FY28, FY29, and FY30, I think its earnings could look significantly different in a few years.

That would provide a foundation for further share price growth.

Could $10,000 in Megaport shares really become $20,000?

Using the recent Megaport share price of approximately $19.69, the shares would need to reach $39.38 for a $10,000 investment to double, excluding costs.

That is an ambitious target, particularly after the company’s recent rally. But I do not think it is beyond reach by 2030.

For that to happen, Megaport would need to successfully convert its existing contracts into revenue and profits, continue winning new customers, and demonstrate that its AI infrastructure business can deliver attractive returns. I would also want to see strong growth continuing beyond the current wave of contracts.

There are risks here. Building AI infrastructure requires substantial capital investment. Megaport is planning to spend between $1.78 billion and $1.88 billion in FY27, reflecting the scale of its expansion.

It also faces rapidly changing technology, competition, and the possibility that AI infrastructure demand develops differently from current expectations.

With so much growth already anticipated, disappointing execution could have a significant impact on the share price.

Foolish takeaway

I think Megaport shares have a realistic chance of doubling by 2030, although I would not treat that outcome as a certainty.

The company has secured a significant foothold in AI infrastructure, and I believe the next few years could see the business grow considerably.

There is still plenty to prove, but if Megaport can turn its growing contract pipeline into sustained earnings and cash flow, I would not be surprised to see the shares trading near $40 before the decade is over.

The post Could $10,000 invested in Megaport shares double by 2030? 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. 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.