The tech sector has been hit hard over the past week, with heavy selling sweeping across global markets.
Artificial intelligence (AI) disruption fears, stretched US valuations, and Nasdaq declines have sparked a broad sell-off in international software shares.
That volatility has dragged down several of the ASX's highest quality technology companies, pushing them to multi-year lows.
Investors have been cutting risk, with growth stocks sold off the hardest. This sharp correction has created some appealing opportunities.
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Why tech shares are under pressure
For the past 18 months, AI has been treated as a major growth driver for software companies. Investors are now reassessing how it will affect earnings, customer demand, and competition across the sector.
At the same time, valuations across US software stocks had expanded significantly after a strong rally, making the sector sensitive to even minor setbacks.
Significant falls on the Nasdaq have prompted fund managers to reduce exposure across the technology sector, and that selling has flowed through to the ASX.
Interest rates are also weighing on sentiment. Higher bond yields tend to pressure long-duration growth companies, where much of the valuation is tied to future earnings.
WiseTech Global Ltd (ASX: WTC)
On Friday, WiseTech shares fell 10.41% to $42.62, their lowest level since July 2022.
WiseTech is best known for its CargoWise platform, which helps logistics providers manage complex global supply chains. It has built a strong position in freight forwarding software and continues to expand its footprint internationally.
Over the past decade, the company has delivered consistent revenue growth and strong margins. Management has focused on developing a single global platform rather than stitching together multiple disconnected systems, supporting scalability and integration.
A large portion of revenue comes from recurring contracts with customers who use the software to run critical parts of their business.
Despite the recent decline, the company remains exposed to a large global market with a long runway for growth.
TechnologyOne Ltd (ASX: TNE)
TechnologyOne shares dropped 7.05% on Friday to $20.17, their lowest level since early August 2024.
The company provides enterprise software to governments, councils, universities and large organisations. Its systems are deeply embedded in customer operations, making switching providers difficult.
TechnologyOne has spent years transitioning customers to its cloud platform, increasing recurring revenue and supporting margin expansion.
Annual recurring revenue (ARR) has grown strongly in recent years, alongside steady improvements in profitability. The business model is simple, focused and scalable.
Like WiseTech, the share price weakness appears more linked to global sector sentiment than any material change in the company's fundamentals.
Foolish takeaway
Tech stocks do not fall 10% in a day without reason.
The market is reassessing growth expectations across the tech sector. That does not mean the fundamentals have suddenly changed.
WiseTech and TechnologyOne are not without risk. However, after this correction, both are trading at levels not seen for some time. If earnings continue to grow and margins remain solid, today's prices could look very attractive in hindsight.
