Should I invest $5,000 into Goodman Group shares?

Goodman Group (ASX: GMG) has become one of the clearest ASX ways to invest in the infrastructure behind artificial intelligence and cloud computing.

The opportunity is substantial, although investors are already paying a premium for it.

So, would I put $5,000 into Goodman shares today?

What would $5,000 buy?

Goodman shares are trading around $29.55. That means a $5,000 investment would buy approximately 169 shares before brokerage.

According to consensus estimates, Goodman is expected to generate earnings per share of $1.28 in FY26 and $1.37 in FY27.

That puts the shares on a price-to-earnings ratio of around 23.1 times FY26 earnings and 21.6 times FY27 earnings.

I would not call that cheap for a property group. However, Goodman has moved well beyond the traditional model of owning warehouses and collecting rent.

Its data centre pipeline gives the company a much stronger growth outlook than most ASX property shares.

Why the data centre opportunity stands out

Data centres are the physical foundation of the digital economy.

Artificial intelligence, cloud computing, streaming, cybersecurity, digital payments, and online services all depend on buildings filled with computing equipment.

Developing those facilities is far more complicated than putting up a warehouse.

A site needs access to enormous amounts of electricity, fibre connections, cooling, planning approvals, suitable land, and proximity to major customers. In large cities, assembling those pieces can take years.

Goodman has already spent a long time securing land and power in markets where technology companies want to operate. Its global power bank reached 6.4 gigawatts (GW) at the end of March, with 3.6 GW secured and 2.8 GW in advanced stages of procurement

Data centres also represented 73% of its $14.5 billion development work in progress.

That gives Goodman a strong position as demand for computing capacity continues growing.

Growth backed by financial strength

Large developments require substantial capital, particularly when Goodman is building facilities with complex electrical and cooling requirements.

I like that the company has several ways to fund its expansion.

Goodman works with major institutional investors through its capital partnerships, allowing it to pursue a larger development program than it could support alone. The group also finished the first half with low gearing and considerable liquidity.

That financial flexibility gives Goodman room to invest while keeping its balance sheet in good shape.

Investors still need to watch development costs, power delays, construction schedules, and customer commitments. The current valuation also assumes that management will continue executing well.

A slowdown in data centre demand or delays across major projects could weigh heavily on the share price.

Would I invest?

My answer is yes. Goodman shares are not a bargain, and I would be comfortable beginning with a measured position rather than investing aggressively at once.

However, the company has spent years building the land portfolio, power access, customer relationships, and development expertise needed to capture the data centre opportunity.

Those advantages cannot be recreated quickly.

Foolish takeaway

I would invest $5,000 into Goodman shares with the intention of holding them for many years.

The current valuation already reflects plenty of optimism, so I would expect periods when the share price becomes volatile.

Even so, I think Goodman has one of the strongest growth runways in the ASX property sector. Its logistics portfolio provides an established earnings base, while data centres could become a much larger part of the business over the decade ahead.

For investors who can accept a modest income yield and focus on long-term growth, I think Goodman shares remain worth buying.

The post Should I invest $5,000 into Goodman Group shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.