We Revise our Long-Term Assumptions for NextDC but Retain our AUD 10.85 FVE

No-moat NextDC is trading in line with our AUD 10.85 per share fair value estimate. We have revised our long-term power efficiency of data storage and power density of storage racks assumptions; however, the changes are offsetting and our fair value estimate is unchanged. We now expect more rapid technological advancement to reduce the required data centre capacity, resulting in lower revenue growth. However, this valuation headwind is offset by lower future capital expenditure. In practice, we expect NextDC to build less data centre capacity than previously forecast to meet the exponential growth in data storage demand.