NextDC's woes mount as it confronts community anger and loss of social licence | The Business

Data centre operator NextDC is in a world of pain, with chief executive Craig Scroggie forgoing his bonuses this year after community protests derailed four of its Melbourne projects.

That alone has wiped about $3 billion off its market value in the past week.

NextDC's woes reflect the broader story about the challenges facing this critical infrastructure for the development of AI.

Capital.com's senior financial market analyst Kyle Rodda says while the crisis may not be existential for NextDC, it does show what happens when several external shocks that can happen to a company aren't priced in.

"And we have experienced one of those external shocks over the last few weeks, which has really shaken the business's outlook as well as investor sentiment," he says.

Kyle Rodda says the real problem for NextDC and companies like it is the danger of losing its social license as communities push back against aggressive rollouts of data centres.

"So if you're an investor...you have to be much more cognisant of those risks because AI is coming like a steam train, it's probably not going to stop anytime soon, but it's going to have bumps along the road or bumps along the tracks."

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