One of the biggest areas of growth around the world right now is artificial intelligence. There's a particular ASX AI stock that is benefiting from the strong demand for artificial intelligence and it's a key enabler of that growth.
A lot of investors are excited about the potential of Nextdc Ltd (ASX: NXT), including the fund managers of the listed investment company (LIC) WAM Leaders Ltd (ASX: WLE).
WAM Leaders aims to actively invest in the highest-quality Australian companies and outperform the ASX share market.
WAM describes Nextdc as a leading Australian technology company providing the critical infrastructure underpinning the digital economy, delivering secure, high-capacity power and connectivity for global cloud providers, enterprises and government clients.
The business is working on data centres in a number of locations including Sydney, Melbourne, Geelong, Kuala Lumpur, Darwin, Perth, Tokyo, Gold Coast, Auckland and Sunshine Coast.
The company says it's delivering on more than 100MW of expansion capacity and is looking to expand into new markets.
Let's take a look at what is attracting the WAM Leaders investment team to this ASX AI stock right now.
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Strong outlook for Nextdc shares
WAM said that the business delivered a "solid" FY25 result, supported by strong contracted utilisation and reduced funding concerns through a "clear outline of debt capacity and a shift towards a more capital-light model."
The fund manager also said that billing utilisation is ramping up faster than anticipated, which signals "potential upgrades to consensus forecasts." In other words, the business is making faster-than-expected business progress, which could lead to analysts increasing their financial expectations, potentially boosting the Nextdc share price.
WAM Leaders revealed that it established a position in the ASX AI stock earlier in the year when the Nextdc share price was "oversold on concerns around artificial intelligence (AI) demand" and the equity raising.
Why the fund manager is bullish on the ASX AI stock
The fund manager said recent developments have "materially strengthened" the outlook. It concluded its optimistic view on the company with the following:
With new joint ventures and debt funding reducing equity issuance risk, combined with sustained demand for AI and cloud infrastructure, Nexdc remains well-positioned as a critical enabler in the digital economy, with further opportunities for major contract wins and long-term earnings growth.
In FY26, the company is expecting to achieve net revenue in the range of A$390 million to A$400 million, up from A$350.2 million in FY25. Underlying operating profit (EBITDA) is expected to come between A$230 million to A$240 million, up from A$216.7 million. In other words, the business is expecting to see another year of solid growth in the 2026 financial year.
