The Megaport share price outlook has quickly become one of the more debated topics in ASX tech circles.
Shares in Megaport have fallen roughly 16% across two sessions, hovering near $7.55 despite delivering what many would consider a strong first half FY26 result.
That disconnect has caught attention. While broader technology sentiment has softened amid global AI volatility, analysts at Macquarie Group have maintained an Outperform rating and a $23.30 price target, implying close to 200% upside from current levels. The question is simple. Is this panic selling, or a signal of deeper risk?
H1 FY26 Results, Revenue Momentum Builds
Megaport’s half year numbers showed clear operational traction.
Total revenue reached $134.9 million, up 26% year on year. Demand for its Network as a Service platform continued to expand as enterprises increasingly rely on flexible, software defined connectivity between data centres and public cloud environments. Annual Recurring Revenue climbed 49% to $338 million. ARR matters. It signals predictability.
The Americas now account for 60% of total revenue and delivered 24% ARR growth, supported by larger bandwidth contracts and a net revenue retention rate of 111%, suggesting customers are expanding usage rather than scaling back.
Gross margins improved to 72%. EBITDA rose 28% to $35.3 million. Customer logos surpassed 3,040, with more than 37,000 live services active globally. That scale reinforces the stickiness of the platform as digital traffic intensifies.
Management upgraded FY26 revenue guidance to a range of $302 to $317 million and lifted EBITDA margin expectations to 21 to 24%. Capex guidance sits between $90 and $100 million, primarily for India expansion and infrastructure investment. Megaport ended the half with $177 million in net cash. The balance sheet remains solid.
Strategic Acquisitions, Expanding the Platform
Megaport did more than report numbers. It also moved strategically.
The acquisitions of Latitude.sh and Extreme IX added $5.8 million in revenue contribution and extend the company’s exposure into edge compute and internet exchange services, areas closely aligned with AI and high performance workloads.
These bolt ons were funded through a $218 million equity raise, avoiding debt and preserving financial flexibility. The logic is straightforward. AI workloads require connectivity. Connectivity requires scalable infrastructure.
Megaport positions itself as neutral plumbing across multi cloud environments, partnering with hyperscalers such as Amazon Web Services, Google Cloud and Microsoft Azure.
Foreign exchange volatility and transaction costs pushed statutory earnings into a $19.1 million loss. On an underlying basis, the loss was far narrower. Investors appear focused on sentiment rather than fundamentals.
Why Macquarie Sees Value
Macquarie argues the stock is materially undervalued at a market capitalisation near $1.4 billion. Its valuation framework assumes stabilising ARR growth, margin expansion post acquisition integration, and continued penetration of the Americas region.
At roughly 3 times sales with ARR growing near 49%, the multiple looks elevated in isolation. However, if revenue compounds at 25% or more through the decade, that pricing appears less demanding.
Context matters. The S&P/ASX 200 Information Technology Index has recently retreated to levels last seen in late 2023, as investors rotated toward resources and defensives amid global AI valuation concerns. Megaport is not a speculative AI developer. It is infrastructure. That distinction is important.
Competitive Positioning in a Multi Cloud World
Megaport built its early growth on the global cloud migration cycle. Now it faces the second wave, AI and distributed compute.
Hyperscalers continue to invest heavily in GPU clusters and edge processing capacity. Enterprises increasingly operate hybrid environments across multiple providers. Megaport’s vendor agnostic model supports that flexibility. Roughly 70% of enterprises operate in multi cloud setups. That structural trend underpins long term demand for scalable connectivity.
India expansion opens access to one of the world’s fastest growing digital economies. Edge compute aligns with 5G and IoT rollouts. Risks remain. Execution missteps could weigh on sentiment. Macro slowdowns could delay enterprise spend. However, the company has liquidity to navigate volatility.
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Valuation Relative to ASX Tech Peers
Comparisons across the ASX technology sector are revealing. WiseTech Global trades on a materially higher sales multiple. TechnologyOne commands a premium valuation driven by stable public sector exposure. Megaport trades at a lower revenue multiple while delivering faster ARR growth. Markets may be pricing near term uncertainty rather than long term opportunity.
What Investors Are Watching
Short term traders are focused on technical support levels near $7.50. Longer term investors are watching operational metrics. Key indicators include Americas net revenue retention, integration progress on recent acquisitions, India rollout milestones, and sustained ARR growth above 30%. Sentiment toward global AI infrastructure stocks will also influence direction. In an environment where AI spending remains robust globally, connectivity providers play a foundational role. The current pullback may reflect fear rather than deterioration.
Time will determine which interpretation proves correct.