It has been a disappointing day of trade for the NEXTDC Ltd (ASX: NXT) share price.
In late afternoon trade the data centre operator's shares are down 1.5% to $6.71, compared to a small decline by the benchmark ASX 200.
Is this a buying opportunity?
I think this could be considered a buying opportunity for investors that are willing to make a buy and hold investment.
Because of the cloud computing boom and the ever-increasing amount of data that consumers and businesses are creating, I believe NEXTDC is well-positioned to grow its earnings at an above-average rate over the next decade.
I'm not alone with this view. According to a note out of Goldman Sachs this morning, its analysts have retained their buy rating and $8.00 price target on its shares.
Today's note named NEXTDC as its top pick in the telecommunications industry alongside telco giant Telstra Corporation Ltd (ASX: TLS).
Why is Goldman Sachs bullish on NEXTDC?
According to the note, the broker believes NEXTDC is well-positioned to deliver another strong year of earnings growth, ahead of its guidance.
In addittion to this, Goldman expects the Australian data centre market to remain strong and pricing to remain firm in the near term given the volume of demand coming through.
Its analysts pointed to its recent IT spending survey in the United States which revealed a step change in cloud adoption as a reason to be positive.
That survey shows workloads in public clouds growing from 6% at the end of 2015 to 38% three years from now and 50% over the next decade.
Goldman said: "We see this as a leading indicator for the trends in the Australian market, and thus as supportive of our positive view around the level of hyperscale data centre demand to benefit the Australian market over the next 5+ years."
Should you invest?
Whilst its shares are certainly high risk due to the premium they trade at, I believe NEXTDC could prove to be a great long-term investment along with fellow data centre operator Macquarie Telecom Group Ltd (ASX: MAQ) and elastic interconnection services provider Megaport Ltd (ASX: MP1)
