2 exciting ASX tech shares that could be buys

Nextdc is one of the ASX tech shares with exciting potential.

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There are a number of ASX tech shares that have exciting potential for growth over the coming years.

Some businesses are exposed to growth trends that are helping certain sectors power ahead.

With that in mind, here are two ASX tech shares with potential:

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

This investment is an exchanged-traded fund (ETF) which is invested in global gaming and e-sports businesses.

Some of the holdings that readers may have heard of includes Tencent, Nvidia, Nintendo, Activision Blizzard, Electronic Arts, Take-Two Interactive, Bandai Namco, Ubisoft, Zynga and Capcom. There are a total of 25 holdings at the end of 2021.

Gaming earnings are generated across the world. Newzoo was expecting the Asia-Pacific region to generate gaming revenue of US$78.4 billion in 2020, accounting for around half of the global games market. The Middle East and Africa region was expected to be the fastest-growing market in 2020, with 14.5% year on year growth to reach US$5.4 billion.

By 2023, the competitive gaming audience is expected to reach 646 million people globally. E-sports revenue has seen an average increase of revenue of 28% per annum since 2015 according to VanEck. This is coming about from fast growth, as well as new revenue streams like advertising and media rights.

This ASX tech share ETF has an annual management fee of 0.55%.

Nextdc Ltd (ASX: NXT)

Nextdc is Australia’s largest data centre business, with operations in each of Australia’s largest cities and plans for more centres.

It’s rated as a buy by several brokers, including Macquarie Group Ltd (ASX: MQG), which has a price target of $16.10 on the business. This price target suggest upside of around 25% over the next year, if the broker is right.

Both the broker and management are focused on the opportunity for the ASX tech share to expand its digital infrastructure platform into new locations. Nextdc is progressing its regional expansion plans and diversifying by going to ‘edge’ locations in regional communities where demand is “expected to continue surging over many years”.

One growth avenue is a new regional development in partnership with the Northern Territory government to develop its first data centre in Darwin, D1. Macquarie thinks that these edge data centres could earn higher yields.

In FY22, the company is expecting data centre service revenue to increase between 16% to 20%, with earnings before interest, tax, depreciation and amortisation (EBITDA) growth of between 19% to 23%.

Should you invest $1,000 in Nextdc right now?

Before you consider Nextdc, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Nextdc wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Vectors ETF Trust - VanEck Vectors Video Gaming and eSports ETF. 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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