NextDC Ltd (ASX: NXT) shares have been on the rise, gaining 12% over the past month to $14.73. The stock is up 20% year to date, although it's only 4% higher over the past 12 months.
Some of the recent momentum appears to be coming from strong earnings from US technology giants including Apple Inc (NASDAQ: AAPL) and Alphabet Inc (NASDAQ: GOOG). But could there be more to the NextDC story?
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At the heart of data centre expansion
NextDC operates data centres, increasingly critical infrastructure underpinning the digital economy. The tech company is positioning itself at the heart of this expansion, with a growing Australian footprint and ambitions across Asia.
It recently opened its first AI-ready facility in Kuala Lumpur and is developing facilities specifically designed for Artificial Intelligence workloads, including its S6 Sydney data centre.
The long-term opportunity is compelling. As businesses increasingly use cloud computing, AI, streaming, online payments, cybersecurity tools and other data-heavy software, demand for secure and reliable data centre capacity should continue growing.
NextDC appears to be executing well. It reported pro forma contracted utilisation of 740MW at 30 June 2026, up 11%, while its pro forma forward order book expanded to 565MW.
Investors in NextDC shares will get more detail when the company releases its FY26 results on 27 August.
Could AI provide another catalyst?
The recent share price strength of NextDC shares has coincided with upbeat results from major US technology companies. Strong spending and growth expectations from tech giants may be encouraging investors to look more closely at Australia's data centre sector.
But there could be a more interesting catalyst beneath the surface.
In July, AI company Anthropic was reportedly running a confidential tender for at least 1.4GW of Australian data centre capacity as it prepares for a potential $3 billion IPO in October. NextDC was reportedly among the operators approached.
If AI companies continue securing enormous amounts of computing infrastructure, NextDC could be well positioned to benefit.
Analysts see plenty of upside
TradingView data shows nine of 10 brokers rate NextDC shares a buy or strong buy. The average price target is $21.60, implying around 47% upside from the current share price.
The most bullish target is $32.29, suggesting potential upside of about 119%, while the most pessimistic target still implies roughly 5% upside.
UBS is among the bulls, maintaining a buy rating and a $22.55 price target.
With AI driving a surge in demand for data centre capacity, NextDC could be a stock worth watching closely.
