NEXTDC Ltd (ASX: NXT) shares are under pressure despite the data centre operator securing $1.1 billion in fresh funding. The stock fell 3% to $12.41 during Thursday morning trading, taking its monthly decline to around 14% and its 12-month loss to roughly 25%.

The paradox is striking. NEXTDC is raising billions to capitalise on booming AI demand, yet investors appear increasingly concerned about how much it will cost to turn that demand into profits.

AI opportunity comes with a huge bill

The funding solves one problem, but highlights another.

NEXTDC is seeing customers reserve enormous amounts of data centre capacity well before the infrastructure is ready to generate revenue. At the end of FY26, contracted utilisation had reached 740.1MW, but only 175MW was already billing.

That leaves a substantial gap between capacity customers have committed to and infrastructure actually generating revenue.

Earlier this year, NEXTDC estimated its existing contracted utilisation could eventually generate more than $1 billion of EBITDA once delivered, without assuming any additional customer wins.

That sounds compelling. The catch is that delivering all that capacity requires an extraordinary amount of capital.

NEXTDC has been tapping equity, debt, and hybrid funding to accelerate construction, while its major developments require access to land, power, equipment, and skilled workers.

That makes execution critical for NEXTDC shares. Any delays, cost overruns, financing pressures, or slowdown in AI infrastructure spending could reduce the returns investors ultimately receive.

There can also be a lengthy lag between signing a customer and bringing new capacity online and generating revenue.

Investors are focusing on capital intensity

The scale of NEXTDC’s spending plans helps explain the market’s caution.

The company expects to spend between $5.25 billion and $5.75 billion in FY27, representing roughly 55% to 70% growth from FY26, as it races to build capacity for AI and cloud customers.

The latest $1.1 billion convertible notes issue is also NEXTDC’s third capital raising in just over four months.

For investors in NEXTDC shares, that reinforces an uncomfortable reality: the AI data centre boom may create enormous demand, but meeting that demand requires enormous upfront investment.

And higher interest rates make capital-intensive infrastructure businesses particularly sensitive to financing costs.

That’s why NEXTDC shares have fallen roughly 14% over the past month even as contracted utilisation has surged to about 740MW and the company carries a 565MW forward order book.

Foolish takeaway

The market isn’t necessarily questioning whether customers want NEXTDC’s infrastructure.

It’s questioning how much capital NEXTDC needs to spend before those megawatts translate into sustainable revenue and cash flow.

For shareholders, that’s the key tension behind the recent sell-off of NEXTDC shares.

The post NEXTDC shares are falling despite $1.1 billion funding boost. Here’s why appeared first on The Motley Fool Australia.

More reading

• You don’t need to own Nvidia to invest in AI – Here are the best Aussie artificial intelligence shares
• NEXTDC secures $1.1bn in convertible notes for data centre growth
• NEXTDC launches $1.1bn convertible notes to fund data centre growth
• Why I’d buy BHP and these ASX shares with $5,000
• 3 ASX growth shares experts think could double

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

DroneShield Ltd (ASX: DRO) shares are down around 1% on Thursday.

The move comes despite a fresh trading update from the counter-drone technology company, although the broader market is also under pressure. The S&P/ASX 200 Index (ASX: XJO) is currently down around 1.3%.

So, has today’s announcement changed my view on DroneShield shares?

What did DroneShield announce?

DroneShield provided investors with a few updates this morning.

The company said FY26 committed revenue has now reached $251 million, up from $240 million reported on 21 August. This puts it inside management’s existing FY26 revenue outlook of $250 million to $270 million. DroneShield also has $46 million of committed revenue for FY27 and beyond.

I think the important part is the continued conversion of demand into actual orders.

DroneShield has spoken for some time about the growing need for counter-drone technology. Seeing more of that demand turn into contracted revenue gives me greater confidence that the opportunity is translating into real sales.

The company also received the first order for its newly released artificial intelligence-enabled RfRecon product. The order is not material financially, but the hardware will be deployed to an existing Western European military customer before the end of 2026.

DroneShield also announced that Rebecca Lowde will become chief financial officer in November. She brings experience from MYOB, Afterpay, Salmat, and Bravura Solutions Ltd (ASX: BVS), which could be valuable as DroneShield becomes a much larger global business.

Why I still think DroneShield shares are a buy

I think today’s announcement adds another piece of evidence that DroneShield is continuing to scale.

The company operates in a market where governments and military organisations are becoming increasingly concerned about the threat posed by drones. DroneShield develops technology to detect, track, identify, and defeat those threats across fixed locations and mobile operations.

What I like is the potential for that demand to continue growing across multiple countries.

DroneShield is also expanding its product range rather than relying on one piece of hardware. The first RfRecon order is a small example, but successful deployment could potentially lead to further orders from existing and new customers.

At $1.71, the shares are also far below the highs reached previously and much closer to their lows.

I think that gives patient investors a more reasonable entry point into a company that still has substantial growth potential.

There is still plenty of risk

DroneShield remains one of the higher-risk ASX shares I would consider buying.

Defence contracts can be large but irregular, and revenue can move around considerably depending on when orders arrive.

The company also needs to prove that rapidly increasing sales can translate into much larger and more consistent profits over time.

That means I would probably keep any investment relatively small rather than making DroneShield a major portfolio position.

Foolish takeaway

Today’s trading update gives me another reason to remain positive on DroneShield.

Committed FY26 revenue has moved above $250 million, while the first RfRecon order shows customers are beginning to adopt another product from the company’s expanding technology range.

At current prices, I still think DroneShield shares are a buy for investors comfortable with the higher level of risk.

The post Should I buy DroneShield shares following today’s trading update? appeared first on The Motley Fool Australia.

More reading

• What are the most shorted ASX shares on the market right now?
• Top 3 ASX defence shares to buy right now
• 3 reasons to buy DroneShield shares after their 74% decline
• These are the 10 most shorted ASX shares
• ASX shares investors are getting younger and trading more often: CBA report

Motley Fool contributor Grace Alvino has positions in DroneShield. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bravura Solutions and DroneShield. 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.

GrainCorp Ltd (ASX: GNC) shares are back in focus on Thursday after the company released a new trading update.

The agribusiness stock is down 3.03% to $6.73 at the time of writing.

That comes despite GrainCorp keeping its FY26 earnings guidance unchanged.

But there was one part of the update that investors clearly didn’t like.

What’s changed?

GrainCorp said its transformation program is still delivering savings, with around $12 million of benefits expected in FY26.

That’s ahead of its previous target, while the longer-term goal of adding $20 million to $30 million to through-the-cycle EBITDA by the end of FY28 remains unchanged.

However, the technology side of the program has been delayed.

The first release, which covers the Nutrition and Energy business, is now expected to go live in the second quarter of 2027. It had previously been scheduled for the second half of 2026.

GrainCorp said the extra time would “reduce implementation risk”, but it comes with a price.

FY27 spending on ‘Release 1’ is now expected to be around $30 million to $35 million, an increase of roughly $30 million from the previous estimate.

80 roles affected

GrainCorp also used the update to announce changes to its Agribusiness operating model.

The company said it is simplifying the way the business operates across its east coast network and corporate support teams, with around 80 roles affected.

GrainCorp expects to recognise around $5 million in restructuring costs in FY26.

Despite those extra costs, the company has kept its FY26 earnings guidance unchanged.

Underlying EBITDA is still expected to come in around the midpoint of its $200 million to $240 million range.

Underlying NPAT is forecast between $20 million and $50 million, including the $5 million restructuring cost.

Crop outlook gives investors some good news

The crop outlook was one positive in Thursday’s update.

GrainCorp said growing conditions remain supportive across NSW and Victoria, although conditions have been drier in Queensland.

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) now expects the east coast winter crop to reach 26.6 million tonnes, around 12% higher than its previous forecast.

GrainCorp also said higher global commodity prices could create more export opportunities during the year.

That should provide some support as the company heads into the upcoming harvest.

Foolish takeaway

GrainCorp shares had rallied strongly before today, climbing around 23% over the past month. They are still down roughly 6% in 2026 and 22% over 12 months.

Before today’s announcement, TipRanks showed 3 buy ratings and 2 holds, with an average price target of $6.85.

That’s only slightly above the current share price, although those targets could change after brokers work through today’s update.

GrainCorp reports its full-year results on 12 November.

The post GrainCorp shares fall after surprise $30 million cost increase appeared first on The Motley Fool Australia.

More reading

• GrainCorp keeps guidance steady as transformation delivers gains
• This ASX 200 stock just got a big upgrade from Bell Potter
• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.