Goldman Sachs just added this ASX All Ords tech share to its conviction list

One leading broker thinks very highly of this ASX tech share.

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The Macquarie Telecom Group Ltd (ASX: MAQ) share price was a strong performer on Thursday.

The cloud computing, cybersecurity, and data centre company's shares rose 2.5% to end the session at $61.52.

Why is this ASX All Ords tech share charge higher?

Investors were buying this All Ords tech share after analysts at Goldman Sachs added the company to its coveted conviction list.

According to the note, the broker has retained its buy rating with an improved price target of $75.30.

Even after today's gain, this suggests the ASX All Ords tech share could rise over 22% from current levels over the next 12 months.

What did the broker say?

Goldman highlights that a recent update from NextDC Ltd (ASX: NXT) appears to demonstrate that trading conditions are strong in the data centre market. This bodes well for Macquarie Telecom and its Macquarie Park operation. It commented:

Recent NXT S3 contract win (36MW in Artarmon, Sydney) is a clear indication of ongoing strength in hyperscale demand and the privileged position of MAQ's capacity in Macquarie Park (~9km from S3), where MAQ plans to build its IC3 Super West data centre (32MW) on its existing campus once it receives DA approval (next 6 months). We believe MAQ is well-placed to secure hyperscale pre-commitments once construction is underway, helping to de-risk the returns outlook and support balance sheet funding.

The broker also believes that the ASX All Ords tech share is well-placed to benefit from favourable trading conditions in managed services and cybersecurity. It adds:

Industry trends and channel checks suggest that high-value managed services (particularly for the Azure stack), public sector spending and cybersecurity are driving strong growth for ANZ IT services – underpinning our positive view on the growth outlook for MAQ's Cloud Services & Government business (+22% FY22-25E CAGR). FY23 guidance appears conservative in this context as MAQ assumes flat sequential 2H23 EBITDA (vs typical 47/53 1H/2H skew), and we see upside risk to the full-year result in August.

Overall, Goldman believes the market is "yet to appreciate the underlying quality of MAQ's services business" and that this tech share deserves to trade on higher multiples.

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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