The top performing ASX 200 tech shares of 2020 

COVID-19 has accelerated tailwinds for many ASX 200 tech shares. Here we take a look at which 4 delivered the best share price gains in 2020.

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From booming online sales to working from home, COVID-19 accelerated a range of trends that benefitted ASX 200 tech shares at large. This saw the S&P/ASX 200 Information Technology Index (ASX: XIJ) soar more than 50% in 2020. As we commence a brand new year, let's take a look at best performing ASX 200 tech shares that beat the market many times over in 2020. 

Best performing ASX 200 tech shares 

1. Afterpay Ltd (ASX: APT) 

It comes as no surprise that the Afterpay share price tops 2020's list of the best performing ASX 200 tech shares after an almost 300% increase last year. More recently, the company exceeded $2 billion of global sales in the month of November, more than doubling the $1 billion of underlying sales delivered in November 2019.

It will be interesting to see how the Afterpay growth story plays out in 2021, including the way in which its acquisition of Pagantis in Europe and its developments in the South Asia region unfold.

2. NextDC Ltd (ASX: NXT

The NextDC share price comes in at second, finishing 2020 87% higher. At face value, the company boasts an outrageous valuation of around $5.5 billion on FY20 revenues of $205.2 million and a net loss after tax of $45 million.

Investors will be hoping, however, there are many redeeming factors that stand to benefit the the cloud provider and its growth trajectory moving forward. For instance, NextDC advised in its November 2020 annual general meeting that, between 2019 and 2023, global investment in public cloud services and infrastructure is expected to more than double. By 2023, $500 billion is the expected cost of public cloud, representing a compound annual growth rate of 22.3%.

3. Xero Limited (ASX: XRO

Xero is the third best performing ASX 200 tech share of 2020 with returns for the year sitting at 82%. The Xero share price surprised many after passing the $100 mark in September and then the $150 mark in December.  

While small businesses may have faced significant disruptions from lockdowns and social distancing throughout the year, Xero's subscriber numbers have continued to grow as though there was no pandemic. For the six months ending 30 September 2020, the company added 396,000 subscribers to total 2.453 million while Xero's operating revenue increased 21% to $409.8 million. 

4. Zip Co Ltd (ASX: Z1P) 

The Zip share price earns the title of fourth best ASX 200 tech share of 2020 after closing out the year 53% higher. This may come as a surprise as Zip shares seemingly went nowhere in the second half of 2020, underperforming broader ASX 200 tech shares. That said, the company did achieve some significant milestones, including completing its 100% acquisition of Quadpay to boost its exposure to the significant United States retail market opportunity.

Following its recent $120 million capital raising, investors will be hoping the Zip share price can regain some momentum in 2021 on the back of the company's expansion plans. These plans include acceleration of Zip's US growth, its much anticipated United Kingdom launch and a ramp up of its new markets division focused on exploring opportunities to expand into new geographies.

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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