Megaport Ltd (ASX: MP1) shares jumped close to 10% higher on Tuesday, closing the day at $17.58 each.
After falling to a three-year low of $6.48 in April, Megaport shares have staged an incredible recovery. The shares have rebounded 171% since that low point, and they're now up around 48% year to date.
The ASX tech shares have rebounded strongly over the past six months, driven by a surge in investor confidence in technology stocks, a strong FY26 earnings result, and several new contract wins.
In August, Megaport announced a huge 37% increase in its revenue for FY26. It also reported a 24% increase in EBITDA and a 62% hike in group annual recurring revenue for FY26. The results came in at the high end of guidance, and investors were thrilled.
The software-defined network (SDN) service provider has also confirmed several new contract wins between late April and late September.
Most recently, Megaport announced it has locked in around $1 billion of new AI deals in late September.
In a note to the ASX, the company said it signed three new AI infrastructure contracts through Megaport's Latitude.sh business. Two are with new customers, and one is with an existing customer.
The deals are worth roughly $978.6 million in total. Megaport will receive around $322.6 million in prepayments, with roughly $281.5 million coming from one new customer before services are delivered.
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Why are Megaport shares climbing higher again this week?
There hasn't been any price-sensitive news out of the company so far in October.
It's most likely that Tuesday's rally is the result of a boom in investor interest for ASX tech shares, with Megaport sweeping up a large parcel of demand.
A tech rally on Wall Street overnight on Monday has helped drive a boom in investor appetite for ASX-listed AI-focused tech stocks this week.
The company also posted a note to the ASX on Tuesday advising investors that Hyperion Asset Management Ltd has become a substantial holder of Megaport shares. The fund manager now owns over 16.6 million shares, which gives it a 7% voting power.
It's possible that this update has been viewed by investors as a green light to buy.
Are the shares a buy, sell, or hold after the latest rally?
Even after the latest rally, the experts are still bullish that we'll see a lot more out of Megaport shares over the next 12 months.
Market Index data shows that all brokers agree on a strong buy rating for Megaport shares. The $25.50 average target price implies a potential 45% upside, at the time of writing.
Forecasts are even more positive on TradingView. Again, the majority of analysts have a strong buy rating on the shares. But the average target price is higher at $28.18. That implies an upside of around 60% at the time of writing.
