There's a rising ASX growth stock that I believe has the potential to rival Nvidia Corporation (NASDAQ: NVDA).
Not Nvidia's global dominating size, mind you. But the kinds of outsized share price gains the United States-based generative artificial intelligence company has been delivering to shareholders.
Unless you've been living under a rock, you'll have been hearing plenty about Nvidia this past year.
And for good reason.
The Nvidia share price has surged 206% over the past 12 months. That gives the AI chip maker an eye-popping market cap of US$2.35 trillion (AU$3.53 trillion).
And, to be sure, you'll be hearing a lot more about Nvidia tomorrow. The company reports its first quarter results in the US on Wednesday (overnight Aussie time).
But it's not Nvidia I want to focus on here.
Rather, it's ASX growth stock NextDc Ltd (ASX: NXT).
Here's why.
ASX growth stock riding the AI wave
Nvidia's remarkable growth story, and that of many international and ASX tech companies, is closely linked to the rapid rise of AI.
Now, we like to say that all of the phenomenal and ever-growing processing power and data required by AI technology resides in the cloud. But, of course, this really refers to data centres.
Indeed, analysts have flagged that Nvidia could reap a whopping US$200 billion in data centre revenue in 2025.
Which offers some strong and ongoing opportunities for ASX growth stock NextDC.
You see, AI-enabled data centres require far more energy and upgraded technologies than traditional facilities.
And S&P/ASX 200 Index (ASX: XJO) listed NextDC is the largest listed developer and operator of data centres in Australia.
In April, NextDC successfully conducted a $1.3 billion capital raising to accelerate the development and fit-out of its key data centre assets in Sydney and Melbourne.
NextDC CEO Craig Scroggie said, "NextDC continues to see significant growth in demand for its data centre services underpinned by powerful structural tailwinds."
As new shares were issued significantly below market price, that initially saw the share price sink. But shares have since recovered and the company is now well capitalised.
Indeed, shares in the ASX growth stock are up 49% over the past 12 months, giving the company a market cap of $10.6 billion.
While I can't foresee the stock overtaking Nvidia's $3.53 trillion market cap, I believe the ongoing AI-fuelled demand for more and better data centres should set NextDC up for a long period of growth.
What are the experts saying?
Earlier this week, Jun Bei Liu, a lead portfolio manager at Tribeca Investment Partners, noted, "We believe AI will be a mega investment trend that permeates every part of human life via business and household adoption."
She said that demand for Nvidia's generative AI chips was "projected to double again in the next six years".
She also named ASX growth stock NextDC one of two of the "best-listed players that we believe directly participate in this megatrend here in Australia."
Morgans is also bullish on the outlook for NextDC.
According to the broker:
Structural demand for cloud and colocation remains incredibly strong. NXT's new S3 and M3 data centres are now open. Consequently, we expect significant new customer wins over the next six-to-twelve months… Sales should drive the share price higher.
Morgans has a 12-month target for the NextDC share price of $19.00. That represents a potential 8% upside from the current $17.59 a share.
But I believe Morgans is being conservative here.
I don't make specific share price predictions.
However, while there are no guarantees, I think that forward-looking, long-term investors who watch this booming mega-trend could send the ASX growth stock significantly higher than $19.00 a share by year's end.
