Everything you need to know about investing in technology in 2026

The ASX technology sector has evolved far beyond the simple "software and hardware" definitions of a decade ago. In 2026, the sector is defined by infrastructure-heavy growth, particularly in AI data centers, cybersecurity, and advanced logistics. It remains home to global "WAAAX" veterans like WiseTech Global and Xero, but it has been bolstered by a new wave of infrastructure players like NextDC and specialized healthcare tech giants like Pro Medicus.

In a broad sense, the sector now comprises companies that not only create digital goods but also provide the physical backbone (cloud infrastructure) and security layers (cyber defense) that modern economies require to function.

About ASX technology shares

The tech space remains the primary engine for growth-oriented investors in Australia. While the "cheap money" era of 2020–2021 is a distant memory, the sector has found a new catalyst in the Generative AI build-out.

As of April 2026, the sector's long-term performance remains impressive, though recent volatility has tested investor resolve. Over the past five years, the technology sector has maintained its lead over the broader market, largely due to the compounding earnings of its largest members.

5-Year Performance Comparison

The following table reflects the annualized total returns (including dividends) over the last five years.

Note: The "All Tech" index experienced a significant correction in early 2026 due to geopolitical tensions and a re-evaluation of AI valuations. However, its 5-year average still comfortably outperforms the broader market's ~5% return.

New Trends and Risks in 2026

While traditional risks like rapid obsolescence still exist, the risks in 2026 have shifted toward Energy and Regulation:

• AI Infrastructure & Data Centers: Companies like NextDC (ASX: NXT) are now viewed as "digital utilities." The bottleneck for growth is no longer just software code, but access to the massive amounts of electricity required to power AI workloads.
• Cybersecurity & Data Governance: Following several high-profile breaches in recent years, cybersecurity is no longer an "optional" tech spend. It is now a mandatory defensive cost for every company on the ASX.
• Agentic AI: We have moved past simple chatbots. The "SaaS" (Software as a Service) model is being replaced by "Agentic AI," where software independently performs complex tasks. This has created a "dispersion" in the market—investors are picking winners that successfully integrate AI (like WiseTech) while punishing those seen as slow to adapt.

Tech can be volatile 

The S&P/ASX All Technology Index (XTX) remains the gold standard for tracking this sector. It is broader than the old IT index, covering 45 constituents across health-tech, fintech, and interactive media.

Many tech stocks in 2026 are still considered "high-conviction" plays. In a bull market with stable interest rates, these growth shares typically outpace the banks and miners of the ASX 200. However, as seen in the April 2026 market dip, tech is often the first sector to be sold off when global "black swan" events occur — such as the recent spike in oil prices and geopolitical rhetoric — due to their high price-to-earnings (P/E) multiples.

For investors, the lesson of 2026 is selectivity. The "tide" no longer lifts all boats; instead, the market is rewarding companies with high recurring revenue and "moats" that AI cannot easily disrupt.

Boom and bust cycles

In times of market panic, investors typically "flight to quality," moving capital into established, profitable large-cap shares. Because many ASX tech companies skew younger and prioritize aggressive reinvestment over immediate dividends, they remain highly susceptible to sharp sell-offs when sentiment shifts.

However, these "busts" often precede rapid recoveries. While the 2020 post-COVID rebound saw the All Technology Index surge 39% in six months, we saw a similar recovery in 2024–2025 as the market rewarded AI-integrated software leaders.

The innovation premium and risk

The tech sector is a cycle of rapid creation and creative destruction. Price bubbles can form quickly as investors chase the "next big thing" (such as the recent 2025 AI hardware craze), leading to sharp corrections when valuations outpace actual earnings.

Successful investing in this space requires acknowledging a fundamental truth: some tech investments will fail. Whether a company is supplanted by a superior algorithm or fails to monetize its R&D, obsolescence is a constant threat. A robust 2026 risk management strategy relies on diversification, balancing high-reward "moonshots" with mature tech stalwarts to survive the sector's inherent volatility.

Key areas for investment 

The ASX technology sector has expanded far beyond traditional hardware and software. Today's landscape is a mix of global heavyweights and specialized local innovators.

1. AI, Payments, and Emerging Tech

• Artificial Intelligence (AI): No longer just a buzzword, AI drives everything from predictive logistics to medical diagnostics. While US giants dominate, the ASX provides exposure through data-centric players like Appen (ASX: APX) and AI-integrated software leaders.
• Digital Payments & BNPL: Following the acquisition of Afterpay by Block Inc (ASX: SQ2), the sector has matured. Buy now, pay later (BNPL) players like Zip Co (ASX: ZIP) continue to innovate as "cashless" economies become the global standard.
• Blockchain & Digital Assets: Beyond cryptocurrency, blockchain's decentralized ledger technology is being integrated into supply chains and financial registries for its "incorruptible" record-keeping.
• Autonomous Systems: While Tesla and Waymo lead self-driving vehicles, ASX-listed companies contribute through specialized sensors and mapping software used in mining and industrial automation.

2. Infrastructure, Cloud, and Software

• SaaS (Software as a Service): The ASX excels here, led by Xero (ASX: XRO), which transformed accounting into a cloud-based subscription model.
• Cloud Computing & Connectivity: As data needs explode, "digital landlords" like NextDC (ASX: NXT) provide the physical data centers, while Megaport (ASX: MP1) offers the elastic interconnection services that make the cloud functional.

3. Internet, IoT, and Security

• Cybersecurity: With data breaches posing systemic risks, cybersecurity is now a non-discretionary expense. Investors often gain diversified exposure here through specialized ETFs like the BetaShares Global Cybersecurity ETF (ASX: HACK).
• Marketplace Leaders: The ASX is home to dominant digital platforms like REA Group (ASX: REA) and Carsales (ASX: CAR), which monetize high-traffic ecosystems through advertising and premium subscriptions.
• Internet of Things (IoT): From smart homes to "AgTech" soil sensors, the IoT connects billions of devices. Companies like Altium (ASX: ALU)—now a global leader in PCB design software—are essential to the manufacturing of these connected components.
• Streaming & Media: Homegrown services like Stan (owned by Nine Entertainment, ASX: NEC) compete with global giants like Netflix, leveraging proprietary digital infrastructure to deliver content.

A look at technology ETFs 

An ETF is a fund that invests in multiple shares but is sold like a single share on the ASX. 

Most ETFs track a specific index, so they provide a way to own an entire market sector without purchasing every stock individually. For example, you might buy an ETF comprising all 200 shares in the ASX 200 or a smaller ETF tracking biotech companies.

Like a mutual fund, an ETF has an expense ratio – the percentage of the fund's assets used to cover management, advertising, and administrative fees. In a broad sense, lower is better, but you should look at overall returns, not just the expense ratio, when considering an ETF.

There are several tech ETFs available on the ASX. We've already discussed HACK, but other examples include the Morningstar Global Technology ETF (ASX: TECH), which tracks a global basket of large-cap tech shares such as Netflix and Alphabet. 

The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) tracks every share in the ASX All Technology Index. The Robo Global Robotics and Automation ETF (ASX: ROBO) follows a basket of AI and robotics-focused companies. 

There are plenty of choices out there!

Who should invest in technology? 

Technology shares offer opportunities for novice and experienced investors alike. They are a highly diverse collection of companies operating in many different fields. And the sector includes many household brands that have become a part of our daily lives, like Afterpay, Apple and Netflix.

It's also an investment space where the average person can jump on an emerging technology they have experienced and believe will become part of the future.

Technology shares offer opportunities for both growth and income investors, who can choose from several mature, established companies. Of course, this is a rapidly developing sector, so there are usually some growth prospects, even in mature companies.

Trying to get a clear picture of the value of a technology share can be difficult. The products and revenue streams can be more complex than a consumer goods company like Woolworths Group Ltd (ASX: WOW), which sells brands and products most of us are familiar with. 

Valuing tech stocks can also be complex. We can value companies using several methods, including earnings-based, revenue-based, cash flow-based, equity-based, and member-based valuations.

Growth investors might like … 

Growth investing is the strategy of buying shares in companies expected to expand significantly in the future. Rather than valuing a stock based on what it has achieved to date, growth investors pay a "premium" today for the company's future potential. These stocks often command immense attention from market analysts, frequently overshadowing much larger, more established companies due to their disruptive nature.

The primary appeal is the prospect of astronomical returns from buying in early. Australian market history provides some spectacular case studies of this "high-conviction" approach:

• Afterpay (The "160-Bagger"): In one of the most famous growth stories on the ASX, Afterpay launched its IPO at just $1.00 in 2016. Despite a volatile journey, shares peaked at over $160.00 by early 2021. This culminated in a $39 billion acquisition by US giant Block Inc in 2022—the largest corporate deal in Australian history.
• Xero (The Long Runway): Listed since 2012, Xero operated in "aggressive growth mode" for seven years before reporting its first profit in 2019. During that decade, the share price climbed from roughly $4.50 to an all-time high near $158.00.

The fact that investors were willing to assign a P/E ratio above 500x to Xero during its expansion phase demonstrates a collective faith in its long-term "runway." However, because these companies often delay profitability to reinvest every cent into the business, traditional valuation metrics can be misleading.

To determine if a growth stock is reasonably priced, you should balance market potential against specific financial health markers:

• Forward Earnings & PEG Ratio: Look at forward earnings projections rather than trailing ones. The Price-to-Earnings-to-Growth (PEG) ratio is particularly useful as it adjusts the P/E ratio by the company's expected growth rate.
• Cash and Debt: For companies not yet reporting a net profit, pay close attention to Free Cash Flow and Debt levels. This helps you understand if the business has enough "fuel" to reach its goals without needing to diluting shareholders with constant capital raises.

Ultimately, growth investing requires a high risk tolerance and an eye for how a company might dominate its industry years down the line.

Top ASX technology shares

Tech stocks often straddle a couple of market sectors. Many ASX Information Technology sector companies combine technology with other services. For example, Xero is also a services company, and Zip Co is also a financial or payments company.  

Investors can gain exposure to various industries by investing in tech stocks. Maybe you don't think BNPL stocks have a bright future, but you believe demand for cybersecurity services will skyrocket in future. You can still gain that exposure by investing in technology stocks and ETFs. 

Three of the largest ASX technology stocks by market capitalisation are listed below. Note that 2 of the companies on this list are members of what used to be the ASX tech scene's hottest club – the WAAAXers. Along with Appen, Altium, Afterpay, and Xero, the WAAAX shares were described as Australia's answer to the US FAANG group, consisting of Facebook (now Meta Platforms), Apple, Amazon, Netflix, and Google (whose parent company is Alphabet).

WiseTech

WiseTech (ASX: WTC) is a global logistics software provider, with its CargoWise platform used by companies worldwide to manage complex supply chains, including customs and freight operations. Its software is deeply embedded in customer workflows, creating high switching costs and a steady stream of recurring revenue. This has helped the company build a strong competitive position while expanding rapidly through both organic growth and acquisitions.

Despite a significant pullback in its share price over the past year, driven by integration challenges, margin pressures, and broader concerns around AI disruption, the underlying business remains solid. Revenue continues to grow strongly, cash flow is improving, and CargoWise is still gaining traction globally. Much of the weakness in reported earnings reflects amortisation and acquisition-related costs rather than a deterioration in core operations.

Looking ahead, WiseTech appears well placed to benefit from the ongoing digitisation of global trade. The company is embedding AI into its platform to enhance efficiency and deepen customer integration, which could strengthen its competitive advantage over time. While risks remain, the long-term growth story is intact, and recent share price weakness may reflect sentiment rather than fundamentals.

Xero 

Xero (ASX: XRO) is a SaaS giant of the ASX that provides cloud-based accounting and payments software to small and medium-sized businesses. It was founded after Rod Drury recognised how difficult bookkeeping was for small businesses. Since listing in Auckland in 2007 and on the ASX in 2012, it has grown into a global platform with a strong presence across Australia, New Zealand, the UK, and beyond. Its software plays a critical role in managing invoicing, payroll, and financial reporting, making it deeply embedded in customer operations and supporting high retention rates and recurring subscription revenue.

Despite a sharp pullback in its share price in recent years, driven by the broader tech sell-off and concerns around AI disruption, Xero's long-term growth story remains intact. The company still has a significant global expansion opportunity and the ability to increase revenue per user through additional services. Encouragingly, analyst sentiment remains largely positive, with most ratings sitting at buy and price targets pointing to meaningful upside. Combined with its scalable model and ongoing shift towards cloud-based software, Xero continues to stand out as a compelling long-term growth play.

NextDC

NextDC (ASX: NXT) is an Australian data centre operator, providing the physical infrastructure required to store, process, and move vast amounts of data. Its facilities house computer hardware, telecommunications systems, and critical IT infrastructure that underpin modern digital services.

As demand for cloud computing, AI workloads, and data storage continues to accelerate, the importance of high-performance data centres has grown significantly. NextDC sits at the centre of this trend, with its infrastructure becoming increasingly essential to businesses. The company has been investing heavily in expanding capacity, and its growing forward order book highlights strong customer demand, supported by long-term contracts and recurring revenue streams.

While this growth comes with challenges such as high capital requirements and potential pressure on near-term earnings, NextDC remains well positioned within Australia's digital infrastructure boom. With operations across the country and international expansion plans underway, it offers exposure to the structural growth of data usage and AI, with some brokers remaining optimistic about its long-term potential.