As we approach the end of the year, many investors are thinking about which ASX shares are best positioned for the coming year.
Two heavyweights in the ASX tech scene, Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) are rated favourably at the moment given their strong growth outlooks.
Both stocks have performed well this year, with Xero up 54% since January and WiseTech, after some recent turbulence, up 70%.
With significant upside potential still on the table, let's dive into why these stocks are gaining momentum.
ASX shares climbing higher
Xero shares have been steadily rising this year as investors take note of the cloud accounting platform's massive market potential.
With 4.2 million subscribers, the ASX share is already a leader in small business accounting solutions. But brokers think it has a total market of more than 100 million businesses globally.
Goldman Sachs is bullish on Xero, highlighting its strong position in key markets like Australia, New Zealand, the United Kingdom and North America.
It says the ASX share is "well-placed" to take advantage of the global trend of digitising small-to-medium businesses (SMBs).
Goldman rates Xero a buy with a price target of $201, implying a potential upside of 15.6% from its closing price of $173.8 on Friday.
WiseTech Global rebounds
The stock market, in all its wonders, is a vessel that (should) serve investors, not the other way around. Volatility in the share prices of high-quality businesses can provide awesome opportunities.
WiseTech Global shares have experienced some volatility in the last few months, so it's no wonder analysts view this as an opportunity rather than a setback.
Don't forget that WiseTech is a strong player in logistics software, with its CargoWise platform integral to the operations of many logistics players.
Macquarie rates the ASX share a buy with a $152.70 price target. It says the company's ability to expand beyond freight forwarding into other markets is a bullish point.
The broker also saw the recent share price pullback as an attractive entry point for investors.
Similarly, Morgans sees value after the share price drop, upgrading its rating to a buy with a price target of $135.30.
It said the ASX share had plenty of catalysts behind it despite "pushing out…revenue growth expectations" to FY26.
Foolish takeaway
Brokers think both Xero and WiseTech Global are poised for long-term growth, with substantial market opportunities and strong fundamentals backing their momentum
Both ASX shares have rallied this year, with no obvious signs of slowing down in the near term.
However, markets, while rewarding, are also unpredictable in the short term. So, time will tell what happens next.
In the last 12 months, Xero is up 71.9% and WiseTech has gained 93.6%.
