Investor sentiment in the data centre space has clearly shifted over the past few months.
Back in June last year, the NextDC Ltd (ASX: NXT) share price was trading at around $18.
Today, NextDC shares are changing hands for about $13.46 each.
While the NextDC share price has lost about 25% of its value over the past year, other ASX-listed data centre companies have not fared much better.
Digico Infrastructure REIT (ASX: DGT), which listed on the ASX in December last year, saw its share price hit a peak of $4.92 in February
Digico shares have since nosedived, shedding about 33% of their value to land on the current price of $3.35.
Meanwhile, the Megaport Ltd (ASX: MP1) share price is down to $12.56 from last year's high of $15.40.
Image source: Getty Images
What happened?
Last year, AI hype was in full swing, and Australia's data centre players saw their share prices skyrocket amid the enthusiasm.
A range of factors have since put downward pressure on ASX-listed data centre companies.
Negative investor sentiment has been strongly influenced by oversupply concerns.
Those concerns increased as countless companies announced ambitious plans to meet projected demand, fuelled by the AI boom.
Caution soon followed.
Major players such as Microsoft and Alibaba announcing plans to downscale their data centre efforts certainly didn't help investor confidence in the data centre space.
As such, the perception of lofty valuations was another factor behind recent sell-offs.
And Australia's data centre plays didn't escape fallout from Trump's tariff regime as global markets tumbled.
Where to from here?
Australia's data centre shares have been rebounding since early April.
The Megaport share price is up more than 35% after sinking to $9.17 amid Trump's tariffs turmoil.
And the NextDC share price is up about 25% while Digico shares have gained about 30% since early April.
Although investor sentiment for ASX data centre shares has clearly improved, little has changed regarding the fundamentals underpinning prospects for the space.
According to CBRE, Australia's data centre capacity is projected to double over the next decade, with a current built-out capacity of around 1.5 gigawatts.
And a recent report by Frank Knight, the Data Centres Global Forecast Report – reaffirms such growth prospects.
"The APAC data centre market is positioned for aggressive growth over the coming years, driven by increasing investor interest across both tier 1 and 2 markets."
ASX data centre plays, particularly NextDC, are well-positioned to capitalise on that growth.
As such, with share prices for numerous ASX data centre companies still far below last year's highs, now could be a good time to buy data centre shares.
