2 ASX tech shares expecting a lot of long-term growth

NextDC is a fast-growing data centre business.

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Key points

  • Here are two ASX tech shares that are lining up long-term growth 
  • Nextdc is a data centre business with a growing portfolio of locations 
  • Altium is a growing electronic PCB software business 

ASX tech shares may have the potential to deliver long-term growth. The world is becoming more technological, which can provide a tailwind.

Some businesses are looking to tap into the growth of this technological trend.

Here are two businesses expecting to become much bigger in the coming years:

NextDC Ltd (ASX: NXT)

NextDC describes itself as an innovative data centre-as-a-service provider. It says that it’s building the infrastructure platform for the digital economy, delivering the critical power, security and connectivity for global cloud computing providers, enterprise and government.

The business continues to grow. In the first half of FY22, its data centre services revenue increased by 19% to $144.5 million, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 29% to $85 million.

The ASX tech share is working on a number of developments including the S3 data centre in Sydney and the M2 and M3 data centres in Melbourne. In December 2021, it acquired its first edge data centre on the Sunshine Coast. New sites have been secured for D1 in Darwin and A1 in Adelaide.

NextDC says that its expansion potential continues to grow, with a total planned capacity of over 400MW, before S4, new regions in Darwin and Adelaide, as well as future planned ‘edge’ locations.

The NextDC CEO Craig Scroggie said:

With liquidity over $2 billion, combined with record operating cash flow, NextDC is in an outstanding position to take advantage of current and future customer opportunities and to press its advantage into new regions and edge locations.

Altium Limited (ASX: ALU)

Altium is a global electronic PCB software provider. The ASX tech share also has other offerings, including Octopart, which is a search engine for electrical parts. The company says that it’s pursuing dominance and transformation.

The company has a goal of reaching US$500 million in revenue and 100,000 Altium Designer subscribers by 2025. It also wants 95% of its revenue to be recurring, excluding China.

Altium says that printed circuit boards are central to the design and realisation of electronics and smart connected products. Management said that Altium 365 and Nexar are connecting electronic design to manufacturing and the wider engineering software ecosystem. Nexar is a cloud-based integration platform, while Altium 365 is Altium’s cloud offering connecting the ‘fragmented’ value chain.

The ASX tech share is planning to build strategic partnerships for the benefit of customers who are highly motivated to pursue digital transformation but who have low organisational capability to implement enterprise software for electronics.

It has a number of leading clients including Tesla, Space X, NASA, Boeing, Google, Siemens, Honeywell, Microsoft, HP, Lenovo, Amazon, Disney, Apple, Fitbit, Broadcom, Qualcomm, Bosch and iRobot.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison owns Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Altium, Amazon, Apple, Microsoft, Qualcomm, Tesla, and Walt Disney. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and has recommended the following options: long January 2024 $145 calls on Walt Disney, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Walt Disney. 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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