Now that interest rate rises may be nearing their end, could there be some relief for much-battered ASX technology shares?
Two examples that have suffered during the growth sell-off over the last 18 months are Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU).
The Appen share price has lost more than 78% since its November 2021 peak, and Altium has dropped 18.5% from the end of 2021.
So if you were a bargain hunter, which one's the better buy?
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Appen struck badly by the spicy flu
As an artificial intelligence data provider, one would imagine Appen would be riding high on the current hype for that theme.
Unfortunately, the COVID-19 pandemic was the worst thing that could have hit the Sydney company.
The big tech companies that were Appen's major customers all cut back on spending and the business has not recovered since. Revenue has stalled and a profitable business has switched to a loss-making one.
The total plunge in the Appen share price since its August all-time daily high amounts to 93.5%.
An update to the market on Wednesday did not flatter either.
"Appen continues to face headwinds from the broader technology market slowdown. As a result, we expect revenue to decline materially in FY23 compared to FY22."
However, it did announce a cost cutting and "revenue diversification" drive to improve the business.
Altium turning it around after a hiccup
Believe it or not, Altium has been around since the 1980s making software for designing printed circuit boards.
While the share price has been skittish, it didn't suffer as much as Appen when the pandemic hit.
Its pains came more from its transition from selling one-off licences to customers to a subscription model.
So while revenue went backwards for the 2021 financial year, growth has returned since.
The Altium share price is up more than 7% year to date, and 23.5% over the past 12 months.
The great positive for its outlook is that circuit boards don't look like fading into obsolescence any time soon.
Betashares manager Libby Hopper last month declared Altium as one of Australia's "under the radar success" stories.
"Altium stands to benefit from increased advancements in and adoption of key technologies such as robotics, artificial intelligence as well as electric and autonomous vehicles," she said.
"Altium has subsequently reaffirmed its guidance for the 2023 financial year, with total revenue anticipated to rise between 15% to 20% to approximately US$255 to 265 million."
The verdict
While there are reasons to be optimistic about each of these tech shares from this point on, my current pick to buy is Altium.
It seems to be the safer pick for future growth with all its fundamentals heading in the right direction.
Appen, unfortunately, will require much to go right both within and outside the company for investors to flock back to the stock.
