The ASX tech share sector just had one of the worst days this decade. But, it doesn't all need to be doom and gloom. I think it's actually a great buying opportunity.
It's true there has been a lot of pain.
The Xero Ltd (ASX: XRO) share price has dropped 25% in a month and more than 50% in six months.
The TechnologyOne Ltd (ASX: TNE) share price is down by 17% in the past month and 44% in the last six months.
The WiseTech Global Ltd (ASX: WTC) share price has fallen 22% in the last month and 55% in the past six months.
Other technology investments have also dropped in recent times, such as Global X Fang+ ETF (ASX: FANG) and Betashares Nasdaq 100 ETF (ASX: NDQ).
These businesses are the same companies they were a few months ago, yet the market is now valuing them at a much lower price.
Time to be greedy with ASX tech shares
One of the world's greatest investors, Warren Buffett, has a number of very useful quotes to help think about times like this.
He said that we should be fearful when others are greedy and greedy when others are fearful. The market is certainly fearful about (ASX) tech shares at the moment.
I like his thoughts even more about comparing the share market to hamburgers when they're on sale. Warren Buffett said:
To refer to a personal taste of mine, I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don't like them anymore.
These ASX tech shares, which investors have lauded as some of the best businesses on the ASX for years, are trading at share prices we've not seen for quite a while. This looks like a smart time to invest.
Yes, there are AI risks, but I'd say the lower valuations already take that into account. Plus, I don't believe the lower share prices account for the fact that the businesses could work with AI and implement it in their business as a positive, rather than it being a direct challenge to them.
The leading ASX tech shares have built up an economic moat, trust with their clients and strong offerings. I don't think those are going away any time soon.
When I'm next able to invest, I'm planning to put some money into some of these names I've mentioned, particularly TechnologyOne. I've been hoping for valuations like this to invest – but the declines don't happen for no reason. We have to invest bravely.
