NEXTDC Ltd (ASX: NXT) and this ASX tech share could be great options for investors looking to gain exposure to the cloud computing boom…
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Although the pandemic has accelerated the shift to the cloud, there’s still a long way to go until this structural shift completes. This bodes well for companies with exposure to the technology.
But how can you gain exposure to this thematic on the Australian share market? Two ASX growth shares which look perfectly positioned to benefit from the cloud computing megatrend are listed below. Here’s what you need to know about them:
Megaport Ltd (ASX: MP1)
Megaport is a leading global provider of elastic interconnection services across data centres globally.
It offers scalable bandwidth for public and private cloud connections, metro ethernet, and data centre backhaul. The company has networking equipment in hundreds of data centres around the world, which has created a software layer that provides an easy way for users to create and manage network connections.
This means that through the Megaport network, users can create and run a global network with or without the need for physical infrastructure.
Earlier this week the company released its half year results and revealed Monthly Recurring Revenue (MRR) of $6.3 million. This was up 37% year on year and annualises to revenue of $75.6 million.
Analysts at Goldman Sachs were pleased with its update and have put a buy rating and $15.55 price target Megaport’s shares. The broker believes the migration to public cloud infrastructure is likely to remain a strong theme and expects Megaport to benefit.
NEXTDC Ltd (ASX: NXT)
Another ASX growth share with exposure to the cloud is NEXTDC. It is a leading data centre-as-a-service provider with a growing number of centres in key locations across Australia.
The accelerating shift to the cloud led to NEXTDC reporting extremely strong demand for capacity in its data centres in 2020. So much so, it brought forward capacity additions and data centre developments.
Since then, the company has raised significant funds via a notes offering. It has also opened up offices in Tokyo and Singapore with a view of expanding into these markets in the future. If this international expansion is a success, it could provide NEXTDC with a very long runway for growth over the next decade and beyond.
Morgan Stanley is positive on the company and currently has an overweight rating and $14.60 price target on its shares.
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James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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