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AI’s impact on Xero (XRO)

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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AI’s impact on Xero (XRO)

Hello James. Was wondering if you had any thoughts on what effect AI could have on Xero (XRO) thank you.

Answer

Hi Barry,

Great question – it’s one we’re thinking about a lot, both for Xero (XRO) and across the broader market, locally and offshore. Like many businesses, Xero stands to benefit significantly from AI, but there are also some important risks to consider.

On the upside, AI allows Xero to streamline repetitive tasks, improve accuracy, and provide insights to users more quickly – giving users more time to focus on higher-value work. It’s also improving customer support, helping detect anomalies, and could support Xero’s push into new markets.

On the risk side, there are concerns around the accuracy of AI-generated outputs, data security, regulation (or lack of it), and ethical issues like bias and transparency. Xero is approaching this carefully, with safeguards in place, particularly through its JAX assistant and supporting frameworks.

That said, AI is also intensifying competition. Established players like QuickBooks and newer, AI-native startups are moving quickly to build faster, leaner accounting solutions. If Xero doesn’t keep pace, it could lose some of its edge, though we do think it has a very sticky user base.

  • We remain positive on XRO heading into 2026, but we’re watching the space closely – the pace of change won’t slow down anytime soon.
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