Goldman Sachs says these ASX 200 shares could rise over 40%

Here's why Goldman Sachs likes these ASX 200 shares…

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If you're looking for some new investments, it could be worth hearing what Goldman Sachs is saying about the ASX 200 shares listed below.

Its analysts rate these shares highly and see major upside potential for investors over the next 12 months. Here's what it is saying:

NextDC Ltd (ASX: NXT)

The first ASX 200 share that has been named as a buy is data centre operator NextDC.

NextDC continued its strong growth in FY 2022 thanks to the ever-increasing demand for space in its data centres thanks to the structural shift to the cloud.

The good news is that Goldman Sachs believes this strong demand is here to stay for some time to come. The broker has previously highlighted NextDC's "compelling" growth profile, its proven and profitable business model, and digital infrastructure characteristics.

Goldman currently has a buy rating and $14.30 price target on its shares. Based on the current NextDC share price of $9.06, this suggests potential upside of 49%.

Xero Limited (ASX: XRO)

Another ASX 200 share that could be a top option for investors according to Goldman Sachs is Xero.

It is a cloud accounting platform provider with ~3.3 million subscribers globally. From these subscribers, the company is currently generating annualised monthly recurring revenue (AMRR) of NZ$1.2 billion and EBITDA of NZ$212.7 million.

Pleasingly, although 3.3 million sounds like a lot of subscribers, it is barely scratching the surface of its addressable market, which management estimates to be 45 million subscribers globally. This gives the company a major runway for growth over the next decade.

Goldman also highlights that Xero is "well-placed to navigate this [economic] uncertainty given the stickiness & importance of its software."

The broker has a buy rating and $111.00 price target on Xero's shares. Based on the current Xero share price of $77.00, this suggests potential upside of 44% for investors.

Motley Fool contributor James Mickleboro has positions in NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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