NextDC Ltd (ASX: NXT) shares have rocketed 44.12% higher in 2020, despite an ASX bear market. The S&P/ASX 200 Index (ASX: XJO) has slumped 21% lower since the start of the year, meaning NextDC has outperformed by 65.12% so far this year.
But, is the ASX tech share overvalued right now or in the long-term buy zone?
Why NextDC shares have rocketed higher in 2020
If you are a NextDC shareholder, you would have hardly noticed the recent market volatility. While the coronavirus pandemic spooked markets and sent ASX 200 shares into a bear market, NextDC shares jumped higher.
I think there's a couple of key factors behind the ASX tech share's gains this year. For starters, the pandemic has caused a re-think for Aussie companies and their working arrangements.
We've seen more businesses move to a work from home model as part of the current restrictions. However, that has also increased the strain on mobile infrastructure and networks and put cybersecurity and data storage in the spotlight.
NextDC owns and operates a number of data storage centres around Australia. That means any changes to current working conditions could boost demand for NextDC's services going forward.
NextDC shares have also been climbing higher after a $672 million equity raising and planned expansion. The group is looking to add more data centres and boost its operational capacity across the country.
That's good news for long-term investors in the ASX tech share who are banking on future growth.
Is the ASX tech share in the buy zone?
NextDC shares climbed 5.47% higher in yesterday's trade and I think the positive momentum could continue. The ASX tech share now boasts a market capitalisation of over $4 billion and is nearing a new 52-week high.
Of course, the COVID-19 uncertainty could continue and hurt growth shares. But I think demand for NextDC's services, combined with a strong balance sheet, could make it a solid buy for the decades to come.
