Megaport Ltd (ASX: MP1) shares have quietly become one of the most talked-about tech names on the ASX. And all for the right reasons, as it's busy building the digital highway of the cloud era.
The share price of the ASX tech stock – $13.17 apiece at the time of writing – has taken a notable hit in recent weeks. In the last month, Megaport shares have lost 13% of their value.
Shifting market mood
The recent tumble is erasing a significant portion of Megaport's strong 2025 rally, although the ASX tech stock is still up 79% this year.
It's a stark contrast with the performance of ASX 200 tech shares in general. By comparison, the S&P/ASX 200 Information Technology Index (ASX: XIJ) is down 19.6% in the past 12 months.
Despite the occasional market tumble, the market mood around this Aussie network-as-a-service provider is shifting. Megaport shares have crossed the line from being a speculative investment to a strategic one.
Here are three compelling reasons why investors are warming to the $2.5 billion tech company.
Expansion into computing
Megaport's recent acquisition of Latitude.sh, a globally scalable Compute-as-a-Service platform, is more than a headline. It's a strategic move. By adding high-performance compute to its network services, Megaport isn't just moving data anymore.
The company is powering workloads that matter for AI, machine learning, and enterprise applications. The takeover beefs up the company's product suite and broadens its market, making future revenue streams stickier and more diversified.
Sticky revenue looks healthy
Megaport's core engine is recurring revenue — the bread-and-butter investors love. Cash flow visibility is improving as businesses increasingly use cloud services and hybrid architectures that depend on software-defined networking.
Megaport's platform allows customers to connect to around 860 data centres worldwide. This approach offers greater cost efficiency, speed, and flexibility compared to conventional networking methods.
The ASX 200 tech stock has been experiencing swift growth. This has helped Megaport underpin a strong annual recurring revenue (ARR) growth. For example, in FY25, it reported a 20% increase in ARR to $243.8 million. This indicates a clearer path to profitability and margin expansion, plus a lock-in effect that keeps clients paying year after year.
Analysts forecast that earnings and top-line growth should accelerate through FY26 and beyond. Some models project double-digit revenue and EPS growth.
Upside ahead
Forget the haters, the consensus analyst view on Megaport is moderately bullish. The average 12-month price target is sitting around $17.50, suggesting 33% upside from recent levels.
A handful of analysts go even further, with the Macquarie team recently slapping an outperform rating with an A$21.70 target on Megaport shares. This implies massive potential gains of 60% plus, if execution matches ambition.
The range of targets demonstrates broad belief in Megaport's long-term growth path, reinforced by recurring revenue models and expanding global footprint.
