Why the Nextdc Ltd share price is soaring today

Shares in Nextdc Ltd (ASX: NXT) are 4.3% higher today to $2.59 after the data centre company announced a big new contract win to provide data centre services for an unnamed client.

NEXTDC lays at the heart of Australia’s digital economy and is perfectly leveraged to the fast-growing demand for cloud and data centre services from Australian businesses and government enterprises.

The shares are up 40% over the past year, with revenue and underlying earnings growing strongly as the shift to the cloud continues.

The company is also committing $60 million to $80 million in capital expenditure on new data centre developments in FY16 in another clear signal for investors that Australia’s digital economy is set to take off.

The company already operates data centres in Australia’s five biggest cities and expects to bring in revenue of $85 million to $90 million in FY16. It also has plenty of operating leverage as costs tend to remain relatively fixed as more clients pay to use its data centre services.

Data centre operators also continue to benefit as demand for data explodes due to the growth of mobile and video internet use, while the shift to the cloud is also accelerating as a business requirement rather than a potential option for private or public enterprises.

This is a powerful tailwind that has benefited several other data centre and internet connectivity businesses like Vocus Communications Limited (ASX: VOC), Superloop Ltd (ASX: SLC) and TPG Telecom Ltd (ASX: TPM).

All of these businesses are well positioned to help investors profit from Australia’s fast-growing digital economy and for that reason should be near the top of all growth-oriented investors’ watch lists.

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Motley Fool contributor Tom Richardson owns shares of Vocus Communications Limited.

You can find Tom on Twitter @tommyr345

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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