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oodman Group's stock has surged this year, outperforming its Australian real-estate peers due to the booming demand for data centers driven by artificial intelligence. Global hyperscalers like Amazon and Microsoft are investing heavily in data centers to meet growing AI service needs. Australia's nascent data center market saw significant investment this year, with Blackstone acquiring AirTrunk for A$24 billion and NEXTDC raising nearly A$4.6 billion.

    As the country's largest property developer, Goodman counts major hyperscalers as customers, although it hasn't confirmed their identities. Its inventory reflects the heightened demand, with data centers under construction making up 42% of its A$12.8 billion portfolio at the end of September, up from 37% last year. This has sent its stock soaring 45.8%, positioning Goodman for its best performance since 2006.

    Investors are more comfortable paying a higher multiple for Goodman due to its increased exposure to data centers in development, said John Lockton, head of investment strategy at Sandstone Insights. "We expect this environment to continue supporting Goodman – CAPEX outlook for hyperscalers implies ongoing growth for FY25."

    However, some market factions caution that investor interest in data-center-focused stocks is cooling as valuations become rich. Winky Yingqi Tan, a Morningstar analyst, thinks Goodman's securities are expensive and flags risks of data center obsolescence and increased supply from rivals eroding returns over time.

    Lockton remains optimistic about Goodman's prospects, citing its existing pipeline and access to land with power supply that can be converted to data centers, which rivals have struggled to obtain.