We started reducing our exposure to XRO in mid-July on valuation grounds, and we are again considering going one step further and switching to fellow tech name NXT. So far in 2024, both stocks have rallied +23%, but we now see more upside from the data centre developer as opposed to the digital accountancy business, with the recent 27% correction in the highly correlated AI giant Nvidia affording us a better entry into NXT, i.e. AI requires huge amounts of energy and storage which NXT delivers with its data centres.
NB We have enjoyed the “data centre” ride from GMG throughout 2024, this move to NXT becomes a logical one to maintain a position in the AI/data centre theme.
- We like both these stocks, but NXT has underperformed through July, following US giant Nvidia (NVDA US) lower. MM owns XRO in our Active Growth Portfolio.
MM is considering switching from XRO to NXT
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