The S&P/ASX 200 Index (ASX: XJO) share I'm going to highlight in this article is exposed to some of the strongest tailwinds around at the moment. I'm talking about data centre stock Nextdc Ltd (ASX: NXT), which has significant growth potential.
There are a number of analysts that rate the business as a buy, including the broker UBS.
UBS describes Nextdc as Australia's leading data centre as a service (DCaaS), carrier-neutral co-location provider. It has data centres across numerous locations including Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Darwin, Port Hedland, Sunshine Coast, Tokyo, Kuala Lumpur and Auckland.
UBS is one of the 15 analysts that rate the ASX 200 share as a buy, according to the collation of recommendations by Commsec. It's a great sign if numerous analysts rate the business as a buy. Let's take a look at why makes it so good.
Benefiting from the AI surge
UBS said in a note that the introduction of AI-related hyperscaler contracts has materially accelerated the activation profile for the business, even faster than it had expected.
In UBS' view, the structural AI thematic is reaccelerating, while cloud remains "very strong" and it's likely to go back into a period of investors wanting exposure to both.
The broker is currently forecasting a compound annual growth rate (CAGR) of 31% for operating profit (EBITDA) between FY26 to FY29.
UBS highlighted potential incremental MW contracted of between 50MW to 100MW in FY26 after a record 72MW contracted in FY25.
The broker noted FY27 net revenue of between $390 million to $400 million, representing year over year growth of between 11% to 14%. Underlying operating profit (EBITDA) is guided to be between $230 million to $240 million, up 6% to 11% year-over-year. Capital expenditure for FY26 is likely to between $1.8 billion to $2 billion.
UBS predicts that by FY30, the ASX 200 share could deliver revenue of $1.4 billion, EBIT of $241 million and net profit after tax (NPAT) of $47 million.
UBS said:
Of the 134MW contracted but not activated, NXT will activate +115MW over FY26/27 to 226MW, a 26% uplift in activation vs consensus (+77MW to 180MW). To put this into perspective, it has taken 25 years for NXT to activate its current 111MW and over the last 5 years, 51MW has been activated.
Price target on the ASX 200 share
UBS has a buy rating on Nextdc shares, with a price target of $21.45. That implies a possible rise of 26% over the next year, which would be a strong performance if that happens.
