ASX 200 tech stock NextDC Ltd (ASX: NXT) is at the forefront of Australia's data centre scene. This makes it a front-runner among investors looking for exposure to artificial intelligence (AI) and cloud computing.
As AI applications like OpenAI's ChatGPT grip various industries in a wave of efficiencies and productivity growth, most experts agree this will also drive demand for advanced data centres.
And there's no more popular AI company in the world than Nvidia Corp (NASDAQ: NVIDIA). Currently trading at a market value of US $3.5 trillion, investors have also bet big on the tech giant's future in driving AI demand.
But even its AI chips need a home, along with all the other AI giants.
One fund manager has cracked onto this and has shared the results in its September letter to shareholders.
Ophir Asset Management has owned the ASX 200 tech stock in its Opportunities Fund since 2013, when it traded at $2.01 apiece.
NextDC shares were trading at $17.23 apiece at yesterday's close, demonstrating a compounding growth rate of 9% per year over that time. You can see it on the chart below, showing the last 10 years of returns.
ASX 200 tech stock home to Nvidia's chips
Data centres have proven to be crucial components of the entire AI value chain, as the sheer processing power and land required to run the servers are ginormous (quite literally).
But Ophir Asset Management argues that NextDC isn't just another data centre operator. It's where major tech giants store and run their digital infrastructure. Last week, the ASX 200 tech stock purchased a new data centre in Sydney.
Portfolio managers Andrew Mitchell and Steven Ng say that NextDC's facilities are unique in that they house the hardware that powers AI. This point has attracted long-term investors to the stock.
The company's more than 1,800 customers include Amazon Web Services, Microsoft Azure, and Google Cloud.
These all need high-tech, secure environments to store servers and data, including Nvidia's coveted chips. Ophir says this positions the ASX 200 tech stock well.
A data centre is the central, physical hub of an organisation's digital operations. It's the secure home with the power and cooling essential to operate the network of computer systems that house a business's data. It is the beating heart of a business's day to day operations.
Many businesses these days don't store their IT infrastructure on premises, but rather use external providers like NextDC in what are called Colocation data centres that reduce redundancy and downtime at a cheaper cost.
In this way NextDC is like Westfield, the landlord, and companies are the tenants, renting space inside the box for their business's equipment.
Ophir believes the big opportunity still lies ahead for NextDC despite already impressive gains in its position in the company.
Aside from its Opportunities fund, it bought the ASX 200 tech stock for its High Conviction portfolio in 2016, when it was valued at $700 million.
NextDc's market value is more than $11 billion at the time of writing.
Foolish takeaway
This ASX 200 tech stock has a big opportunity ahead of itself, according to Ophir Asset Management.
The fund manager says NextDC's role as a 'landlord' to those needing data centre services could set it apart in an increasingly competitive space.
Time will tell if this is true. The NextDC share price has climbed 43% over the past 12 months.
