If you're looking to take advantage of recent weakness in the tech sector then the two ASX tech shares listed below might be the ones to consider.
Here's why they are rated as buys:
Appen Ltd (ASX: APX)
Appen has a global team of over a million crowd-sourced experts that prepare the data that goes into artificial intelligence (AI) and machine learning models. It has worked with tech giants such as Microsoft, Facebook, Google, and Apple. In respect to the latter, Appen played a role in the development of its virtual assistant, Siri.
The good news is that AI is still at a relatively early stage and the market is expected to grow strongly in the future. At its half year results, management noted that AI spending is growing at 28% and could accelerate as AI adoption increases in a post-crisis environment. This is particularly the case in the government sector, with AI budgets increasing rapidly into the billions.
Analysts at UBS are confident in Appen's long term growth prospects. Following its half year update, the broker slapped an outperform rating and $44.00 price target on its shares.
ELMO Software Ltd (ASX: ELO)
ELMO is a cloud-based human resources and payroll software company. It provides businesses with the ability to streamline a wide range of processes through a single unified platform.
ELMO has been growing at a strong rate over the last few years and has continued this positive form in FY 2021. This is being driven by the rapid adoption of cloud-based solutions, the quality of its platform, and its growth through acquisition strategy. The latter saw the company recently announce the acquisition of UK-based Breathe. This gives the company access to the SME market and plenty of cross-selling opportunities in the $6.8 billion UK market.
Analysts at Morgan Stanley responded to the news by reaffirming their overweight rating and lifting the price target on ELMO's shares to $9.30. This compares to the current ELMO share price of $6.42.
