One of the most widely held companies on the New Zealand sharemarket has just seen its biggest asset balloon in value, and the reason comes down to the enormous amount of computing power the world now wants to build.
Infrastructure investor Infratil told the NZX this week that its near 50 percent stake in Australian data centre business CDC had jumped by more than $2 billion in the second quarter of the year. An independent valuation of the whole of CDC rose by almost a quarter in the three months to the end of June, up 23.6 percent to a mid-point of A$18.5 billion, or about NZ$22.5 billion. That was in line with what the market had been expecting.
Infratil holds 49.72 percent of CDC, and the value of that slice climbed to A$9.21 billion, or NZ$11.2 billion. That is an increase of A$1.76 billion, or NZ$2.14 billion, from the A$7.45 billion the stake was worth at the end of March, as RNZ reported. CDC is the largest privately owned and operated data centre business across Australia and New Zealand, and it has become the single most important driver of Infratil’s own share price.
Investors noticed. Infratil shares rose about 2 percent to $15.42 after the update, helping push the NZX 50 index to a fresh high in an otherwise quiet week of holiday trading. For a company that sits inside a large number of KiwiSaver and managed funds, that kind of move flows through to the retirement balances of hundreds of thousands of ordinary New Zealanders, most of whom will never have heard of CDC.
The jump in value is not the result of a one off accounting tweak. Infratil said the increase was driven by several things, chief among them strong growth in the amount of capacity CDC has recently signed customers up for, which has now passed one gigawatt. A gigawatt is a useful way to measure a data centre business because these buildings are defined less by their floor space and more by how much electricity they can pull in and turn into computing. One gigawatt is roughly the output of a very large power station, and it is all being pointed at racks of servers.
The company also lifted its longer term ambitions. CDC now expects its development pipeline to reach 3.9 gigawatts by the 2040 financial year, up from a previous plan of 2.6 gigawatts. In plain terms, the company is telling the market it intends to build far more than it thought it would even a few months ago.
Forsyth Barr senior analyst Ben Crozier said the expanded pipeline was a sign that demand for data centres was running ahead of the industry’s ability to supply them. “We view this material increase in its pipeline positively albeit was foreshadowed at Infratil’s FY26 result in May,” he said. “They’re sort of doubling this business every two years at the current run rate, so it’s quite strong growth, and then they added another 1.3 gigawatts of capacity to their pipeline.”
The scale of the money involved is hard to overstate. Crozier said that extra 1.3 gigawatts alone represented around A$20 billion, or NZ$24.3 billion, in capital investment. “So it’s quite big numbers involved in this investment these days,” he said. Building data centres has become one of the most capital hungry activities in the developed world, and the firms that can secure land, power and customers ahead of time are the ones being rewarded.
What is pulling all of this demand is the boom in artificial intelligence. Training and running large AI models requires vast fleets of specialised chips, and those chips have to live somewhere with reliable power and cooling. Crozier pointed to reports over the weekend in the Australian media that AI company Anthropic was lining up data centre contracts, and that CDC was in a strong position to win some of that work. “So people are expecting new customer wins, and certainly Infratil was talked about,” he said.
For Infratil, CDC is the standout performer in a portfolio built on the idea of owning the unglamorous but essential plumbing of the modern economy. The company also holds stakes in renewable electricity generation in New Zealand, Australia and further afield, in the mobile network One NZ, in Wellington Airport and in a range of other long life infrastructure. Data centres have quietly become the jewel in that collection, and the June valuation confirms just how far the balance of the business has tilted towards digital infrastructure.
There are reasons for caution alongside the excitement. Valuations that rise this quickly can fall just as fast if the AI investment cycle cools or if customers do not sign up in the numbers now being assumed. The pipeline figures stretch out to 2040, and a great deal can change between now and then. The capital required is enormous, and building it out will mean raising money, taking on debt and competing with deep pocketed global rivals for power connections and skilled staff. Independent valuations are also just that, estimates rather than cash in the bank, and they can be revised in either direction.
Even so, the direction of travel is clear enough. The world is racing to build the physical home for artificial intelligence, and a New Zealand listed company sitting in a lot of local investment portfolios owns a large chunk of one of the businesses doing the building. For now, that has been a very good place to be.
What do you make of the data centre boom and the money pouring into it? Is this a smart bet on the future or a bubble waiting to deflate? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply