The tech sector has been uncharacteristically out of form in recent months following weakness on Wall Street's Nasdaq index.
While this is disappointing if you're already a shareholder of these tech companies, I see it as a big gift to non-shareholders.
The two ASX tech shares listed below, for example, are down heavily from their 52-week highs. I feel this could be a great entry point for a long-term focused investment. Here's why:
Appen Ltd (ASX: APX)
The Appen share price is down over 25% from the 52-week high it reached just under a month ago. This means that the artificial intelligence services company's shares are now changing hands at 37x estimated FY 2022 earnings. While this is still a premium to the market average, I think it is more than fair given its positive long term growth outlook.
Due to its leadership in the data preparation market for machine learning and artificial intelligence, I believe it is well-placed to continue delivering strong earnings growth over the 2020s. Last month IDC forecast spending on artificial intelligence to double in four years to US$110 billion. That's a compound annual growth rate of 20.1% for the 2019 to 2024 period. It commented: "Companies will adopt AI — not just because they can, but because they must." This bodes well for Appen.
Pushpay Holdings Ltd (ASX: PPH)
The Pushpay share price has bounced back recently but is still trading approximately 14% lower than its 52-week high. I think this has left it trading at a very attractive level for investors that are looking for buy and hold options.
Pushpay is a leading donor management and community engagement platform provider for the church market. Although this is a niche market, it certainly is a very lucrative one. Management is aiming to win a 50% share of the medium to large church market, which it estimates to be worth US$1 billion a year in revenue at present. Given the quality of its platform and the shift to a cashless society, I feel very confident it will achieve its goals.
