If investors are going to buy shares on the Australian stock market, it may as well be some of the most compelling S&P/ASX 200 Index (ASX: XJO) blue-chip shares around.
Some people may love to have a portfolio stuffed full of the greatest names we can buy. This seems like a great time to do it because of lower valuations.
For investors who have been wanting to own a piece of the ASX's tech shares, but high prices have been off-putting, I think it's time to pounce.
Pro Medicus Ltd (ASX: PME)
Pro Medicus describes itself as a leading healthcare informatics company that provides a full range of medical imaging software and services to hospitals, imaging centres, and healthcare groups worldwide.
It provides clients with offerings across radiology imaging solutions (RIS), picture archiving and communication systems (PACS), AI, and e-health solutions.
Despite the wonderful progress that the company's financials have seen recently, the Pro Medicus share price has dropped by more than 40% in the last six months, as the chart below shows.
The FY25 result was a powerful performance by the ASX 200 blue chip, with revenue growth of 31.9% to $213 million and net profit after tax (NPAT) growth of 39.2% to $115.2 million. It has one of the highest operating profit (EBIT) margins on the ASX.
Since the end of FY25, it has won a number of contracts, including new clients, add-on module contracts with existing clients, and the achievement of the authority to operate (ATO) from the US Department of Veterans' Affairs.
It's not cheap, but it's much better value now. Net profit is still expected to compound strongly in the coming years. The Pro Medicus share price is now valued at 124x FY26's estimated earnings and 75x FY28's estimated earnings, at the time of writing.
Xero Ltd (ASX: XRO)
Xero has been on a fast-growth journey for many years, and it continues to have big ambitions.
However, despite having the most subscribers and the most operating revenue in its history, the Xero share price has dropped by approximately 45% over the last six months, at the time of writing.
The company's accounting software is proving to be very popular, as shown by the very high subscriber retention rate (around 99%) each year, as well as the ongoing subscriber count. In the FY26 half-year result, the business reported its total subscriber base increased 10% year over year to 4.6 million.
I'm also pleased to see that Xero's average revenue per user (ARPU) is growing over time, meaning that the ASX 200 blue-chip share is extracting value from its subscriber base.
The company's profitability is rapidly increasing, which I think helps justify a higher Xero share price – more than today's current valuation. In HY26, net profit grew 42% to NZ$135 million and free cash flow rose 54% to NZ$321 million.
For the coming years, I'm predicting Xero's global subscriber base will continue growing thanks to the tailwind of digitalisation of accounting and financial reporting (including to taxation authorities). I'm also expecting rapid profit growth thanks to its very high gross profit margin of close to 90%.
