NextDC and OpenAI Build AI Data Center in Sydney
Australian data center operator NextDC has signed a memorandum of understanding with OpenAI to develop a major artificial intelligence facility in Sydney. The partnership will establish a 550-megawatt hyperscale AI data center campus at NextDC’s Eastern Creek site, located approximately 45 kilometers west of Sydney’s central business district.
The project represents a capital investment of A$7 billion, equivalent to US$4.6 billion, making it one of the largest AI infrastructure developments in the Asia Pacific region. The facility will occupy a 258,000-square-meter site adjacent to NextDC’s existing S7 data center, which the company acquired in the previous year for A$353 million.
NextDC shares responded strongly to the announcement, climbing 10.9 percent to reach A$14.900 during Friday trading. The stock emerged as the top performer on the Australian benchmark index, which declined 0.3 percent on the same day. This marked the highest share price for the Queensland-headquartered company since mid-November.
The new facility will feature a graphics processing unit supercluster designed to support advanced AI computing requirements. Major Australian corporations including Commonwealth Bank of Australia and retail conglomerate Wesfarmers are expected to utilize the infrastructure as foundation clients.
Brisbane-based NextDC was established in 2010 by Australian technology entrepreneur Bevan Slattery. The company has expanded its operations across major Australian cities and is currently developing new sites in Tokyo, Kuala Lumpur, and Auckland. According to the company’s investor documentation, NextDC requires approximately A$15 billion in capital over the next decade to complete its pipeline of mega data center projects in Sydney, which are projected to deliver over 850 megawatts of combined capacity.
The Australian government has indicated the development will generate thousands of employment opportunities during the construction phase. Additional permanent positions in technical, manufacturing, engineering, and operational roles are anticipated once the facility becomes operational.
NextDC recently revised its fiscal year 2026 capital expenditure guidance upward by A$400 million to a range between A$2.2 billion and A$2.4 billion. The adjustment reflects the company’s accelerated timeline for expanding inventory and deploying capacity to fulfill new customer contracts.
The partnership aligns with OpenAI’s broader economic blueprint for Australia, which aims to accelerate artificial intelligence adoption and infrastructure investment across the country. The initiative comes as the Australian government has unveiled its own roadmap to enhance AI integration within the national economy, moving away from earlier proposals for stricter regulatory frameworks on high-risk AI applications.
Australia’s data center sector has experienced significant growth and attracted substantial international investment. Industry analysis from Cushman & Wakefield forecasts the market’s capacity will nearly triple to 3.6 gigawatts by 2030, driven by surging demand for cloud computing services and AI applications. Last year, investment firms Blackstone and Canada Pension Plan Investment Board completed the acquisition of data center operator AirTrunk for A$24 billion. Global technology companies including Amazon and Microsoft have also increased their infrastructure investments in Australian cloud and AI facilities.
The guaranteed revenue stream from securing OpenAI as an anchor tenant provides NextDC with financial stability for the large-scale project. However, industry observers note potential challenges including power supply costs for energy-intensive AI computing operations and ongoing regulatory discussions regarding intellectual property concerns associated with large language model training.
