S&P/ASX 200 Index (ASX: XJO) AI stock NextDC Ltd (ASX: NXT) has come roaring back since its recent April lows.
Shares in the data centre operator and developer closed yesterday trading for $13.50 apiece.
While that leaves the ASX 200 stock down 10% year to date, shares are now up 34% since closing at $10.04 on 7 April.
With 641.28 million shares outstanding, this sees NextDC command a market cap of $8.65 billion.
And with the rapid rise of artificial intelligence demanding a huge global increase in upgraded, AI-friendly data centre space, NextDC appears well-placed to keep growing.
That's according to Seneca Financial Solutions' Arthur Garipoli (courtesy of The Bull).
Why this ASX 200 AI stock is a buy
"This data centre operator recently announced it had won a 50MW (megawatts) artificial intelligence development deal at its Melbourne facility," said Garipoli, who has a buy recommendation on the ASX 200 AI stock.
As for the first reason Garipoli is bullish on NextDC shares, he said:
The company recently reiterated fiscal year 2025 revenue and EBITDA [earnings before interest, taxes, depreciation and amortisation] guidance amid lifting capital expenditure guidance to meet additional demand.
Garipoli also noted that NextDC "is well placed for ongoing structural data growth, which is accelerating data centre demand".
And the third reason to buy NextDC shares today is the expectation of ongoing new contract wins.
"NXT is expected to expand its footprint and continue winning new contracts, which should provide meaningful earnings upside," Garipoli said.
What's the latest from NextDC?
In its March quarter operational update, released on 6 May, NextDC revealed that following recent customer contract wins, its contracted utilisation as at 31 March had increased by 52MW, or 30%, to 228MW over the prior three months.
And as at 31 March, the ASX 200 AI stock reported a 54% quarterly increase (45MW) in its forward order book to 127MW. That's a record result for the data centre company.
Now, there won't be any immediate revenue from these new customer contracts. NextDC said it expects revenue recognition for the majority of the new contract wins to commence in FY 2027.
Commenting on the quarterly performance of the ASX 200 AI stock, NextDC CEO Craig Scroggie said:
We are very pleased to have recorded the largest increase in contracted utilisation in the company's history.
The rise of artificial intelligence and high-performance computing is reshaping the data centre industry at speed. Hyperscale customers are scaling AI-native infrastructure at unprecedented levels.
