How this exponential growth could send ASX 200 data centre shares soaring

COVID-19 ramped up demand for data, but the exponential growth trend was already there. What does that mean for ASX 200 data centre shares?
The post How this exponential growth could send ASX 200 data centre shares soaring appeared first on The Motley Fool Australia. –

asx share price making all time highs represented by cartoon man flying high on a paper plane

COVID-19 certainly accelerated the global demand for digital data storage as people turned to working, shopping, and socialising from home.

However, the exponential growth trend in global data usage was in place long before the pandemic. That trend looks to continue for years to come. This could offer some healthy tailwinds to S&P/ASX 200 Index (ASX: XJO) data centre shares.

Data demand growth forecast is “daunting”

Lee Seok-hee is the CEO of South Korean tech share giant SK Hynix Inc (KRX: 000660), which has a market cap of approximately AU$108 billion.

As Bloomberg reports, Lee:

[E]xpects exponential growth in data and bandwidth consumption spurred by new technologies like 5G networking, artificial intelligence and self-driving cars. So-called hyperscale data centers are set to double in number by 2025 to 1,060… providing the infrastructure and distribution systems for everything from social media and online gaming to smart agriculture and connected factories.

According to Lee, “The total amount of both structured and unstructured data is expected to increase exponentially. If you look at the capacity requirement of DRAM and NAND Flash for each data centre, the numbers are daunting.”

One leading ASX 200 data centre share

There are a number of quality ASX shares involved in data storage and chip manufacturing.

ASX 200 listed Nextdc Ltd (ASX: NXT), with a market cap of $5.0 billion, counts among the biggest and best-known data centre shares in Australia.

As demand for data storage continues to rocket, NEXTDC should continue to see growth in the demand for its services. The company also has plans to potentially expand its operations into Singapore and Japan.

UBS, for one, believes NEXTDC has a bright future, with a buy rating and a $15.40 price target on its shares. That’s almost 42% above the current price of $10.87 per share.

Share price snapshot

Up 1.4% in intraday trading today, NEXTDC shares remain down 12.5% in 2021.

Over the past 12 months, the NEXTDC share price is up 56%. That compares to a 49% gain on the ASX 200.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post How this exponential growth could send ASX 200 data centre shares soaring appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!