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Xero (XRO), WiseTech Global (WTC) and growth stocks

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Question asked 23/01/2026

Xero (XRO), WiseTech Global (WTC) and growth stocks

As I type this, XRO hit a low of 98.66. Almost 50% drawdown from its peak of 196. This is a great business, but great business dont fall 50%. Where do you see this going? Do you see recovery? Same Question for WTC, where do you see this going. I am aware the whole tech sector sentiment is down, but 50% drawdown is huge. Thoughts please

Hi Xero share price continues to decline, I notice that of the TradingView data shows 11 out of 14 analysts have a buy or strong buy rating on the ASX shares. The maximum target price is a huge $228.45 a piece, which implies the shares could jump 130.99% over the next 12 months, at the time of writing. At circa $97.00 today this seems very bullish. You guys seem positive?. Anything else I’m missing on this stock. Steve

Hi James & Team - What's your current view on these growth stocks? Would you be buying Catapult, WiseTech & Xero now or do you see further falls in their share price? (Mid Dec one of Shawn's trade ideas was -"Trade Idea: Buy Catapult Sports Ltd (CAT) at $4.04 with initial stops at $3.60 – 11% risk." It was trading at $3.63 on Thursday. regards Debbie

Team, Happy New Year. I was interested in your outlook for CAT as it has been volatile early in 2026. Regards Jeff

Gents As you well know the Aus tech sector has been soft. In aggregate down something like 20% in 3 months. Some stocks down a lot more on an individual level. Q - what are your thoughts on something like ATEC? It looks appealing given the spreading of risk over a portfolio of names. Or would you prefer to hand pick a few names and go that route (assuming you think our tech names are looking more attractive - which I think you have been suggesting). Tnx Matt

Answer

Hi Guys,

The volume of questions we’ve received on local tech and growth stocks reflects just how weak the sector has been over the past six months. Software has been hit far harder than we expected, with some “quality” household names down 40–50% from their 2025 highs.

There are a few key drivers behind the sell-off.

First, software stocks have been hit globally by fears that they may prove to be AI casualties rather than AI beneficiaries. Rapid advances in AI-driven coding and development have raised concerns that, instead of paying for expensive, off-the-shelf software, businesses will increasingly build their own solutions tailored to specific use cases—at a much lower cost.
This is not an Australia-only issue. Global names such as Atlassian, Salesforce and HubSpot have all been sold off on similar fears.
We can see some logic to this argument in certain cases. Salesforce, for example, operates in an area where it is becoming far easier and cheaper for businesses to develop in-house CRM solutions. In addition, Salesforce’s pricing model is largely based on the number of “seats” used. If AI drives productivity gains and leaner workforces, demand for seats could structurally decline.

That said, we don’t think this rationale applies evenly across the sector.

In the case of Xero or WiseTech, the economics are different. Xero’s cost to the end user is not high enough to justify building a bespoke accounting system, while WiseTech is deeply embedded in global supply chains, making it very difficult to displace. These platforms benefit from scale, data, integration and regulatory complexity that AI alone cannot easily replicate.

However, it must be acknowledged that AI has dramatically lowered the cost of software development, and that trend will continue. What companies like Xero and WiseTech have spent to build their platforms will no doubt look laughable in a few years (if not already) – but incumbents still retain powerful advantages in distribution, trust and ecosystem lock-in.

Ultimately, the bar to entry in software has been lowered, and the market is repricing the uncertainty this creates.

We still believe select companies can perform well from here, and many are now materially oversold. XRO, WTC and CAT fit that bill, and we are likely to re-weight allocations higher once selling pressure begins to ease.

There’s a lot more to unpack here, so we’ll publish a dedicated deep-dive next week covering individual stocks. Interestingly, Life360 (360) surged 27% on Friday after reporting record user and paid subscriber growth in Q4—highlighting just how much bad news is already priced into parts of the sector.

We continue to think the sector is looking for a low—though, admittedly, we’ve thought that for a while.

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ASX200 v ASX200 Tech Sector

LAST UPDATED 23/01/2026 12:36

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