Bullish about data centre growth? I'd try these 3 ASX 200 shares

These stocks are benefiting from strong technological demand.

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The world is becoming increasingly technological in numerous ways. One of the most important elements of this change and growth is data centres. There are a few S&P/ASX 200 Index (ASX: XJO) shares that are tapping into this growth sector.

Cisco describes a data centre as the following:

At its simplest, a data centre is a physical facility that organisations use to house their critical applications and data. A data centre's design is based on a network of computing and storage resources that enable the delivery of shared applications and data.

The key components of a data centre design include routers, switches, firewalls, storage systems, servers, and application-delivery controllers.

In other words, it's an important physical element of the global digital infrastructure.

Here are three ASX 200 shares trying to take advantage of this growth tailwind.

NextDC Ltd (ASX: NXT)

This ASX 200 share describes itself as Asia's most innovative data centre as a service provider. It says 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".

It has several data centres already operational across Australia's biggest cities.

Interestingly, the company now looks at data centre growth in different locations, including Auckland, Kuala Lumpur, Tokyo, Singapore and Port Hedland.

NextDC said contracted utilisation in FY23 was up 39.2MW (47%) to 122.2MW since 30 June 2022. In FY23, the company grew total revenue by 25% to $362.4 million.

This business may give the most obvious and concentrated access to the data centre growth tailwind on the ASX.

Megaport Ltd (ASX: MP1)

This ASX 200 share describes itself as a leading provider of network-as-a-service solutions. Its global software-defined network (SDN) helps businesses "rapidly connect their network to services via an easy-to-use portal" or its open API. The company offers "agile networking capabilities" that "reduce operating costs and increase speed to market" compared to traditional networking solutions.

In the three months to September 2023, being the first quarter of FY24, Megaport generated total revenue of $40.5 (up 5% quarter on quarter), and it made $15 million of earnings before interest, tax, depreciation and amortisation (EBITDA) (up $14 million year over year).

The company is growing its core offering at a reasonable rate and recently launched Megaport Reach as a "rapid, cost-effective way for data centre operators to deploy to new locations, bringing the cloud to their facilities in under 90 days."

Goodman Group (ASX: GMG)

Goodman is best known for owning, operating, and building industrial properties. But, it has a plan to build a growing portfolio of data centres.

The ASX 200 share's 3.7GW power bank includes delivered projects, secured and potential data centre projects.

Data centres under construction currently represent approximately 25% of work in progress (WIP).

Goodman's pipeline is geographically spread across 12 cities and is in locations that are large, consumer-focused markets with high barriers to entry.

It's working with customers to assess various project delivery and leasing models that suit their requirements. The existing power bank is expected to develop over the next seven to ten years.

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 positions in and has recommended Cisco Systems, Goodman Group, and Megaport. The Motley Fool Australia has recommended Goodman Group and Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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