Australia Has Truly Joined The Data Centre Race

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Australia is well and truly catching up on investments into AI supporting data centre infrastructure. Is there also an ambition to become a regional powerhub for this emerging technology megatrend?

-NextDC and Goodman group taking the lead in domestic data centre development
-Increasingly offshore participants are joining in locally
-Accumulating investments show confidence investors have in the sector's future
-Can Australia become a regional powerhub for the new technological breakthrough?

By Jason Collins

In recent years, Australia has been lagging behind in terms of AI infrastructure, but no longer is this the case. With NextDC’s ((NXT)) recent 50 MW hyperscale AI deal and its certification in NVIDIA’s DGX-Ready Data Centre program, the country is staking its claim in the global AI infrastructure race. 

Now more than ever, Australian providers are rapidly scaling up to support AI and cloud computing at home, to contend with an industry long dominated by massive data centres in Asia and the US. With much happening in this space, this article will explore how data centre operators in Australia are capitalising on the AI boom. 

It will also focus on the surge of multi-billion-dollar investments shaping the sector and whether Australia can emerge as a regional AI hub despite its geographic isolation from traditional tech heartlands. 

NextDC’s 50MW AI Deal Signals a New Era

Founded in 2010, NextDC has been one of Australia’s leading data centre providers for over a decade. Although its name is no stranger to news headlines, the company most recently grabbed attention thanks to the company’s success in securing a landmark 50 MW hyperscale AI infrastructure contract for its Melbourne facilities. 

This groundbreaking achievement surpasses not only typical single-deal enterprise contracts, but also represents a significant leap in scale, reflecting a rising need for dedicated AI computing capacity. 

Analysts noted this was “a step up and ahead of expectations”, involving a large AI platform deployment and significantly boosting NextDC’s forward order book. It is also worth noting NextDC reported a historic 30% increase in contracted utilisation following major AI wins, underscoring how generative AI and machine learning workloads are filling Australian data centres at unprecedented rates.

Additionally, NextDC’s move to become part of NVIDIA’s DGX-Ready Data Centre program in 2024 positioned the company as a go-to provider for organisations that want to deploy advanced AI infrastructure on Australian Soil. By joining this program and becoming certified to host Nvidia high-density AI systems, NextDC demonstrated its ability to meet the stringent requirements for power, cooling, and reliability necessary for supercomputers and cluster GPUs. 

Essentially, by aligning with Nvidia and committing to massive power deals and further development, NextDC has made a clear gambit to lead Australia’s AI data centre push.

A $2bn Bet on AI and More to Come

Joining the Nvidia program and securing the landmark deal are only the tip of the iceberg when it comes to NextDC’s ambitions. Based on its capital investment plans, it’s evident the company is not averse to taking risks to propel Australia into the ranks of the global AI infrastructure giants. A testament to this is its $2bn commitment to build a new AI Factory campus in Melbourne’s Fishermans Bend Technology precinct that it calls the ‘M4’. 

NextDC is building this upcoming facility to focus on high-performance computing and AI and is set to feature a 150MW power capacity and innovative cooling for racks exceeding 1,000kW each. With these capabilities, experts believe the precinct will be substantial in size, especially considering it will include an AI innovation hub created in partnership with Nvidia’s latest architectures. The facility will also include a mission-critical operations centre for defence and enterprise, as well as a centre of excellence for AI skills development. 

According to NextDC’s CEO Craig Scroggie, the “M4 has been designed to meet the five critical imperatives for Australia’s AI future speed, scale, sovereign capability, sustainability, and security.” In other words, it aims to provide the sheer scale and reliability required for next-generation AI while maintaining that capability onshore for the sake of sovereignty and security. 

Eco-friendliness and sustainability are other key considerations for NextDC, as they are for those involved in AI data centres. Consequently, the new M4 facility will incorporate battery microgrids, on-site solar generation, and waste-heat recycling systems.

Based on the latest sources, construction of this facility is expected to begin in 2026. This -$2bn investment and future financial commitments by the company exemplify the AI-fueled boom underway in Australia’s data centre sector. 

Not Just NextDC Investing

Several Australian data centre providers have been investing heavily in expansion, with companies collectively committing more than NextDC’s $2bn in new projects recently. These investments have been made to keep up with escalating infrastructure needs in the sector. 

An example is the property giant Goodman Group ((GMG)), which raised $4bn in early 2025 to fund data centre developments. The Goodman Group cited “escalating demand for data centres fueled by increased cloud use, migration of data to the cloud, AI and machine learning” as a key driver in its decision.

For many experts, this decision was unsurprising, considering Goodman reportedly already has 5GW of data centre capacity in 13 cities globally and is in the process of adding another 50MW by 2026 across major cities, including Melbourne and Sydney, as well as other hubs.

This rapid expansion represents a step-change in growth. AI and cloud workloads are scaling up so rapidly that Australian operators are almost being compelled to invest at unprecedented levels to keep pace. 

Australian Data Center Operators Ride the AI Wave

With the rapid scaling, local Australian operators are catching the attention of international investors. A few years ago, this wasn’t the case, as most of Australia’s data centres were relatively modest by global standards. 

Nowadays, it can even be argued that some of Australia’s data centres are outpacing the international competition. Let’s have a look at how two operators are riding the AI wave:

AirTrunk

Aside from NextDC, AirTrunk, a homegrown hyperscale specialist, now operates Australia’s largest data centre campuses and some of the largest in the Asia-Pacific region, a notable achievement. The company’s flagship campus in Sydney exceeds 130MW in capacity, which is a substantial figure for the area. 

To put this into perspective, some mega campuses in the US target 1,000MW or more, but more than 100MW makes AirTrunk a regional giant. AirTrunk’s explosive growth led to a landmark acquisition in late 2024, when US private equity firm Blackstone acquired a majority stake, valuing AirTrunk at $24bn. This massive deal underscores the bullishness of investors in Australian digital infrastructure. 

It’s also worth noting AirTrunk continues to expand both domestically and internationally, with the company recently announcing a -$2.5bn data centre project in Malaysia.

This project, the company’s first major initiative following the acquisition, aims to support AI and cloud services, keeping pace with evolving industry needs and staying competitive in the data centre market. 

Equinix and Stack Infrastructure

Although not headquartered in Australia, Equinix, the world’s largest data centre operator, has become a key enabler of AI infrastructure across the country. With a growing network of facilities in Sydney, Melbourne, Perth, Brisbane, and other major hubs, Equinix offers what Australians need: high-density colocation and interconnection services tailored to support AI workloads. 

The company’s recent expansions and upgrades in Australia have focused on enhancing low-latency connectivity and GPU-ready environments. They have also focused on direct access to cloud and AI platforms, partnering with Nvidia and major hyperscale providers to achieve this. As interest in AI model training, inference, and edge deployment continues to rise, Equinix is positioning itself as a foundational player in Australia’s AI infrastructure ecosystem.

Stack Infrastructure is another global provider turning its attention to Australia’s AI-driven data landscape. With a recent commitment to building a large-scale data centre campus in Melbourne, Stack is building facilities capable of AI and high-performance computing (HPC) workloads.

These new developments by the company emphasise scalability, energy efficiency, and sustainable power sourcing. Many experts believe Stack’s entry into the Australian market signals increasing global recognition of Australia as a strategic location for next-generation data centre infrastructure capable of handling AI’s explosive growth.

Canberra Data Centres and Macquarie Technology Group

Local firms besides NextDC and AirTrunk are equally riding the AI wave. Canberra Data Centres (CDC) has grown rapidly by serving the needs of government and defence, including high-security and supercomputing requirements, and is expanding into new regions. 

Additionally, Macquarie Technology Group ((MAQ)), another domestic provider that operates Macquarie Data Centres, has opened new Sydney facilities featuring high-density cooling to cater to AI and cloud clients. Even property developers and telecom companies are entering the fray, drawn by the potential for growth. 

Evidently, the market’s trajectory is striking, with many industry experts expecting Australia’s data centre capacity to nearly triple over the next five years, based on current development pipelines. This growth projection underscores both the growing appetite for AI infrastructure and the confidence investors have in the sector’s future.

What Is Pushing The Need for AI Infrastructure Growth?

It’s all well and good to know the companies involved in Australia’s data centre race and to learn about their capabilities and achievements, but what is actually pushing the need for AI infrastructure growth? The answer is complex, but to simplify it, much of the expansion is linked directly to AI workloads. 

It is the opinion of many that the primary driver of investment in AI infrastructure in Australia is the rising adoption of AI across sectors. AI requires extensive, energy-intensive infrastructure, which has led to the development of massive campuses by NextDC, AirTrunk, Amazon (AWS), and other leaders as they strive to remain competitive and successful. 

Before the wave of AI, traditional cloud services and enterprise IT companies were already pushing data centre growth. But now growth is driven exponentially by the sudden rise of generative AI, which requires thousands of GPUs and high-power computing clusters. 

Data centre operators are responding by not only increasing capacity but also enhancing technical sophistication: deploying liquid cooling for dense AI racks, strengthening power grids, and partnering with chipmakers and cloud providers to ensure their sites are AI-ready.

Can Australia Become a Regional AI Hub?

Although there is clearly expansion and development underway in the Australian AI Infrastructure, can the country become a regional AI hub? This is a question many have been asking, considering the country’s geographical remoteness. The answer is complicated, as there are compelling arguments for both sides. 

Why It Can

Australia can offer a strong talent base, political stability, and a hardy infrastructure, which are all attractive to tech investments. In fact, a significant investment has recently occurred, with Amazon planning an $20bn AWS investment between 2025 and 2029, which Australia’s Prime Minister, Anthony Albanese, views as an opportunity to “build AI capability using secure, resilient infrastructure” in the country.

Amazon’s move is the largest tech infrastructure investment in Australian history to date, presenting a compelling argument the country is well-positioned to become a global leader in AI and technology. Additionally, the Australian government has also demonstrated support for the development of AI infrastructure. It classifies data centres as vital infrastructure, and partnering on initiatives such as a secure national cloud further showcases the country’s potential. 

Australia can also serve not only its population in an AI capacity but also international companies if the country continues developing AI factories and cloud availability zones. With these factories and zones, the country can handle overflow AI training jobs from Southeast Asian or Indian companies. 

The country’s strategic location also means it can provide connectivity between East Asia and North America via undersea cable routes. To bring it back to NextDC, the company already has initiatives underway with its Sunshine Coast data centre that leverages submarine cables to offer the fastest links from Australia’s east coast up to Asia.

These links help reduce latency barriers, which are crucial in the AI sector. Additionally, NextDC’s presence in Darwin and Perth helps extend this same connectivity toward Southeast Asia. 

Why It Might Not

It’s undeniable Australia is geographically isolated from the world’s largest internet markets. There are an estimated 7,000 miles between Australian and Californian hubs and even further to European hubs. Unfortunately, this vast distance results in higher latency, which can be a significant disadvantage for real-time services in the AI space. 

For example, when it comes to AI services that need to be near end-users, such as computer applications, places like Melbourne or Sydney may not be the first choice for serving users in Northern Asia or Europe due to network latency. On the other hand, AI training workloads that aren’t as time-sensitive and don’t depend on latency as much will find this distance less of an issue.

Additionally, the scale of investment needed to truly rival regions like Silicon Valley or Virginia is immense. Australian data centres, while growing rapidly, still account for only a fraction of the capacity in those hubs. A single US cloud region might dwarf the entire installed base of Australia.

These are all compelling arguments for why the country might not be a global player within the next five to ten years. Still, it’s not impossible, especially with investment and the scalability demonstrated by companies like NextDC, AirTrunk, and Amazon. 

The Bottom Line

While Australia’s distance from other tech centres is a reality that cannot be ignored, the steps taken to boost connectivity, scale capacity, and ensure reliability show that distance is not an insurmountable barrier. If current trends continue, Australia will carve out a significant role in the regional (and possibly global) AI ecosystem, serving as a hub where cutting-edge AI technologies live and thrive, underpinned by homegrown innovation and robust investment.

In summary, Australia’s data centre race is on, and NextDC’s gambit is just one example of the nation’s determination to shape its own AI-powered future. With the convergence of supportive policies, surging demand, and strategic investment, Australia is proving it can build and sustain world-class AI infrastructure at scale. 

The coming years will reveal how far this momentum can carry Australia toward becoming an Asia-Pacific haven for high-performance computing, but the foundation being laid today is undeniably strong.

Australia may be far in terms of geography, but it is moving closer to the forefront of the AI revolution, one megawatt at a time.

ASX-listed Infratil ((IFT)) currently owns 49.75% of Canberra Data Centres (CDC).

More reading:

https://fnarena.com/index.php/2025/07/09/rudis-view-the-megatrend-you-simply-cannot-ignore/

https://fnarena.com/index.php/2025/06/23/australias-digital-infrastructure-opportunity/

https://fnarena.com/index.php/2025/06/19/fnarena-visits-nextdcs-s3-data-centre/

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