Megaport Ltd (ASX: MP1) shares are showing no signs of slowing down.
On Thursday, the cloud networking company closed 5% higher at $20.74, just shy of its all-time high of $21.16.
The recent rally has been extraordinary. Megaport shares are up around 70% over the past month, 83% year-to-date, and an astonishing 220% from their 3-year low reached in early April.
That raises the obvious question: after such a powerful run, do brokers still see more upside?
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What's driving the surge?
The latest rally in Megaport shares has been fuelled by a combination of strong operational momentum and renewed enthusiasm for artificial intelligence infrastructure exposure.
A key catalyst has been a series of major AI-related contract wins, reportedly worth around US$275 million, which have reinforced confidence in the company's global growth pipeline.
Investors have also responded positively to continued strength in recurring revenue metrics and improving visibility across its core platform business.
Asset-light AI model
Megaport's investment case is increasingly tied to its role in AI infrastructure.
Unlike traditional data centre operators, Megaport shares offer investors exposure to AI-driven demand with shorter implementation lead times and significantly lower capital expenditure requirements. This asset-light model has made it an attractive way to participate in global AI infrastructure growth.
The company's expanding ARR base is another key strength. At its first-half FY26 results, Megaport reported group annualised recurring revenue (ARR) of $338 million, representing a 49% increase year on year. That level of growth has helped underpin the re-rating in the share price.
In early May, the company also narrowed its FY26 revenue guidance to a range of A$307 million to A$315 million, while maintaining its EBITDA margin and capital expenditure forecasts, signalling stable cost discipline alongside rapid expansion.
If this momentum continues, the business could sustain high growth rates while improving operating leverage over time.
Risks and mixed broker views
Despite the strong performance, not all analysts believe the rally can continue unchecked.
Macquarie remains one of the most bullish voices on Megaport shares. The broker is impressed with Megaport's recent contract wins and sees the company as a compelling way to gain AI exposure without the heavy capital intensity of traditional infrastructure players. It retains a buy rating and a $27.80 price target, implying roughly 30% upside from current levels.
However, Morgans took a more cautious stance last week. The broker downgraded Megaport to accumulate from buy after the stock's sharp re-rating. The broker suggested the share price is now closer to fair value following a near 90% surge over the past month. Morgans' $21 price target sits only slightly above the current share price.
Buy, hold or overcooked?
Megaport's explosive rally reflects strong execution and rising AI infrastructure demand. However, with analysts now split on valuation, the next phase of gains may depend on whether the company can continue delivering exceptional growth to justify its elevated share price.
