Xero Ltd (ASX: XRO)

Hi Darren,

We’re on the same page as you, in terms of being surprised how far Xero has declined this FY. There have been a couple of major headwinds at play which have combined to see the stock plunge ~70%:

1. Rising bond yields have weighed on XRO, and other growth stocks, just as they did in 2022.
2. The “AI Disruption Trade” has hammered XRO along with its US rival Intuit (INTU US) which has also fallen ~70%, in its case since August.

The issue isn’t earnings with XRO now profitable and revenue forecasted to surge more than 30% in FY27 although it hasn’t helped that they bought Melio for ~US$3bn this time last year, just before valuations plunged across the space.

We hold XRO (wish we didn’t) in MM’s Growth Portfolio but in line with our outlook moving forward on bond yields and the worst-case scenario being built into XRO from AI we like the risk/reward around $56.

• Technically, XRO is bullish XRO from ~$56, initially targeting a bounce back towards $90, or more than 30% higher.

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Xero Ltd (XRO)

LAST UPDATED 08/10/2026 10:49

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Xero Ltd (XRO)

LAST UPDATED 08/10/2026 10:49