NEXTDC operates nine data centers across Australia, with a further two in development, counting major global companies as their customers including Amazon, Google, Microsoft and Oracle. The demand for data storage continues to soar and is a strong tailwind for NextDC. Energy is a key cost, it takes a lot of power to keep the centers running, and higher costs here have weighed on shares in recent months, leading to a new 2-year low being reached this week, though NEXTDC has renewable generation at most sites and passes on the bulk of any electricity costs to customers with some lag. Also holding back performance has been a lack of supply of key hardware pieces with constraints likely to ease in coming months if they haven’t already. Overall, MM think they have a strong runway for growth, increasing demand and scale benefits dropping through to earnings in time.
MM is bullish NXT ~$9.00
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