Nextdc and 2 other thriving ASX tech shares to buy

Check out a few of the top ASX tech shares like Nextdc Ltd (ASX: NXT) that I'm keen on despite some lofty valuations right now.

ASX tech shares seem to be all the rage right now. The Nextdc Ltd (ASX: NXT) share price has been surging higher in 2020 to lead the S&P/ASX 200 Index (ASX: XJO) outperformers.

But it's not just the Aussie data centre operator that I've got my eye on. I like a few of the top ASX tech shares right now but the key is to find those that are still good value.

Here are a few of my top picks that I like even at their current prices.

businessman riding rocket on line graph

Image source: Getty Images

Nextdc and 2 other ASX tech shares to buy

I really like ASX tech shares with a strong underlying story. For Nextdc, I think that's the spectacular growth in demand for off-site data storage and security.

Australia is transitioning towards a semi-permanent work from home setup. That means more companies are going to look to use data centres as a core part of their business operations.

Nextdc is an incumbent in the industry and is well-placed for future growth. The company already provides connectivity and data centre services alongside technical support.

With the growth of cloud connectivity and collaboration tools, I think the ASX tech share may continue to climb in 2021.

Nextdc aside, I like the look of Xero Limited (ASX: XRO).

The Xero share price has jumped 15.3% higher this year and isn't far off its all-time high.

Google Finance suggests the ASX tech share currently trades at a price-to-earnings (P/E) ratio of 4,309.9. We won't get to see the Kiwi accounting software group's earnings until November. 

That means it's something of a gamble but I wouldn't consider Xero a relative value play. Xero to me has long-term potential to transform the business world with simple accounting.

I think strong customer retention and acquisition is the key here. If Xero can continue to land big clients and deliver strong earnings, it could crack the $100 per share barrier.

Finally, Altium Limited (ASX: ALU) is on my watchlist after its full-year earnings result yesterday.

Altium reported strong revenue growth of 10% to $189 million and continues to be a printed circuit board software leader.

The ASX tech share increased its subscriber base by 17% and posted a record earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 40%.

I think this strong growth profile underpins the future potential of the Altium share price despite its lofty valuation.

Foolish takeaway

These are just a few of the ASX tech shares that I like at their current prices. 

I'm sure we'll see more volatility in the years ahead, but I think a solid underlying business is the key to long-term success.

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. 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 Scott Phillips.

More on Technology Shares

Man using a laptop next to the backside of server racks in a data centre.
Technology Shares

Nextdc vs Macquarie Technology Group: Which data centre share shines brighter?

With the Firmus IPO up in the air, investors may be looking at other ASX-listed data centre players.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Xero shares crash 63% in a year: Is there any upside left?

Are Xero shares a buy, sell, or hold?

Read more »

IT technician works on a laptop in big data centre full of rack servers.
Technology Shares

How the Firmus float just tanked this company's share price

Doubts about the massive data centre IPO are brewing.

Read more »

A woman holds up hands to compare two things with question marks above her hands.
Technology Shares

Life360 vs Droneshield: Which ASX tech stock is a better buy?

Weighing up Life360 vs Droneshield? Here’s which ASX tech share I’d buy right now, based on the latest numbers.

Read more »

Businesswoman working with laptop and documents in office, with virtual finance related graphs and charts.
Technology Shares

Could WiseTech shares be worth $50 again?

I look at whether forecast earnings growth could support a recovery from $32 to $50.

Read more »

A silhouette of a soldier flying a drone at sunset.
Technology Shares

Droneshield vs NextDC: Which ASX tech share is the better buy?

How do Droneshield and NextDC stack up? I compare fundamentals, valuations, and recent performance to help you pick the better…

Read more »

IT specialist using laptop in data centre full of server racks.
Technology Shares

Buy this ASX share to get exposure to the Firmus IPO

Data centre stocks are extremely hot right now.

Read more »

Two colleagues looking at a graph and comparing share prices.
Technology Shares

3 ASX 200 shares I'd buy and hold for the next decade

These shares have qualities that could make them great buy and hold picks.

Read more »