The ASX share Nexgen Energy (Canada) CDI (ASX: NXG) may well be one of the best ways to benefit from the strong growth of AI. It's the owner of a large uranium deposit in Canada, which could be a great profit generator.
It's one of the picks inside the L1 Long Short Fund Ltd (ASX: LSF) portfolio, which is a listed investment company (LIC) that targets ASX shares and international shares. The LIC likes to invest in ASX mining shares – it's very willing to do so when they seem attractively priced.
Attractive project
L1 recently noted that NexGen is preparing to develop the world's largest undeveloped uranium deposit called Arrow, which is located in Saskatchewan, Canada.
The fund manager said that Arrow will be a new major strategic Western source of uranium to address the "looming market deficit".
L1 highlighted that the ASX energy share received final regulatory approvals in March 2026. The company is preparing to commence full-scale project construction, with an estimated four-year construction timeline.
How much money could this project generate?
The fund manager believes that once the project is completed, Arrow has the potential to generate around C$2.8 billion of operating profit (EBITDA) annually, assuming a uranium price of US$80 per pound, which is below the current uranium price. In the three months to June 2026, the uranium price increased by 1.5%.
L1 suggested that the ASX share is a "highly compelling proposition given NexGen's current market cap" of approximately C$8.8 billion. That suggests it's trading at around 3 times the future potential operating profit.
I think the project could generate stronger profits than expected because AI demand is growing, and therefore additional power generation is needed to plug the gap. Nuclear could be a key part of the equation globally, alongside renewable energy, as coal is slowly phased out around the world.
What do other experts think of the NexGen share price?
According to CMC Invest, there have been three analyst ratings on the business within the last three months, with all of those being a buy.
The average price target of those three ratings is $21.07, suggesting a possible rise of around 60% from where it is today. The ASX share looks much better value after falling more than 20% since early June 2026.
The Arrow projection completion is still a while away, but the company could be a compelling buy at the current level. But there are other ASX shares that could also be compelling investments today.
The post Is this ASX share the best way to play the AI demand growth? appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. 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.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026