Megaport/Latitude continues to raise prices for GPUs and Gen4 CPUs

Overview

This report is a quick take by Citigroup on Megaport (MP1.AX), with a core focus on Megaport/Latitude's recent GPU and Gen4 CPU price adjustments. The report notes that Blackwell GPUs and some Gen4 CPUs have seen price increases over the past few months, with GPUs rising since mid-May and Gen4 CPUs completing their adjustment around late April.

Core views

Citigroup's core view is that Blackwell GPUs are already fully utilized, so GPU price increases are unlikely to generate a material incremental earnings contribution; in contrast, CPU price increases are seen as a more direct positive change. From a valuation perspective, the $22.10 target price comes from a blended framework of DCF and relative valuation, while also considering equity cost roll-forward and dividends over the next 12 months.

Analysis framework

The report identifies pricing changes in Latitude's products through recent price checks and combines DCF and EV/EBITDA relative valuation to assess Megaport's target price. In the relative valuation, different multiples are applied separately to the Latitude and Network businesses to reflect business characteristics and peer discounts.

Methodology notes

• Valuation methodsBlended valuation

  Average of DCF and relative valuation

  The $22.10 target price comes from a rolling blended valuation, which is the average of the DCF valuation of $19.65 and the relative valuation of $20.40, minus dividends to be paid over the next 12 months.

• Valuation methodsDCF valuation

  Discounted cash flow

  The DCF valuation uses a beta of 0.9, WACC of 9.2%, risk-free rate of 4.0%, and terminal growth rate of 3.5%.

• Valuation methodsRelative valuation

  EV/EBITDA multiple

  The relative valuation uses approximately 10x FY28e EV/EBITDA for the Latitude business, representing a 35% discount to peers; and 19x EV/EBITDA for the Network business, in line with peers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Megaport (MP1.AX)

  Covered target in the report

  Strengths

  The Latitude and Network businesses provide valuation support, while CPU price increases and potential penetration gains in North America and Europe form the upside scenario.

  Weaknesses

  GPU resources are already fully utilized, limiting the incremental impact of GPU price increases on earnings; growth still depends on new services, channel strategy, and market expansion.

  Comparison

  The Latitude business is valued at 10x FY28e EV/EBITDA, a 35% discount to peers, while the Network business is valued at 19x EV/EBITDA, in line with peers.

  Risks

  Weaker macro demand, slower-than-expected growth in new services, intensifying competition, cloud densification, dependence on third-party infrastructure, and technology substitution risk.

Key data

• Report date2026-06-15The report cover page time is 15 Jun 2026 04:13:54 ET.
• Target price$22.10Derived on a rolling basis from the blended valuation.
• DCF valuation$19.65Uses a beta of 0.9, WACC of 9.2%, risk-free rate of 4.0%, and terminal growth rate of 3.5%.
• Relative valuation$20.40Based on FY28e EBITDA-related multiples.
• Latitude valuation multiple10x FY28e EV/EBITDAA 35% discount to peers.
• Network valuation multiple19x EV/EBITDAIn line with peers.

Impact & implications

The price increases indicate that some of Latitude's computing resources have pricing power. Since Blackwell GPUs are already fully utilized, the marginal earnings contribution from GPU price increases may be limited; Gen4 CPU price increases are more likely to have a positive impact on revenue or profit. From an investment perspective, attention should be paid to whether the price increases can translate into sustained earnings improvement, and whether new services and regional expansion can deliver growth.

Risks

• Weak economic conditions lead to demand coming in below expectations.
• New services such as Megaport Cloud Router and Megaport Virtual Edge fail to achieve expected growth.
• Go-to-market investment fails to generate the expected growth.
• Megaport products are surpassed by superior technologies.
• Competition intensifies.
• Cloud densification may affect demand structure.
• There is dependence on third-party infrastructure.

What to watch

• Whether Blackwell GPU and Gen4 CPU price increases can be sustained and translated into actual earnings contribution.
• Resource utilization and pricing elasticity in the Latitude business.
• Whether penetration in North America and Europe is faster than expected.
• Sales performance of new services such as Megaport Cloud Router and Megaport Virtual Edge.
• The pace of channel strategy execution and whether it drives faster growth.
• Potential new service launches or bolt-on acquisitions.