S&P/ASX 200 Index (ASX: XJO) tech stocks, including software-as-a-service provider TechnologyOne Ltd (ASX: TNE) and business and accounting software provider Xero Ltd (ASX: XRO), have had a rough start to the new year.
How rough?
Well, as at market close on Tuesday, the ASX 200 has gained a solid 2.81% year to date.
As for ASX 200 tech stocks, the S&P/ASX 200 Information Technology Index (ASX: XIJ) is down 20.53% so far in 2026.
Xero shares have performed even worse, down 31.15% year to date, while the TechnologyOne share price has slumped 22.32%.
Online real estate advertising company REA Group Ltd (ASX: REA) also hasn't escaped the selling pressure. REA shares are down 11.43% this calendar year.
Of course, that will sound pretty good to shareholders of health imaging company Pro Medicus Ltd (ASX: PME). The Pro Medicus share price is down a precipitous 42.97% year to date. That's despite Pro Medicus reporting all-time high half-year profits last week, with underlying net profit up 29.7% year on year to $67.3 million.
Indeed, the sharp sell-down has little (or in some cases seemingly nothing) to do with these companies' recent performance.
Rather, investors appear to have been favouring their sell buttons amid concerns that rapidly advancing artificial intelligence tech could breach these stocks' defensive moats and eat their proverbial lunches.
But has the selling been overdone?
Image source: Getty Images
Could these ASX 200 tech stocks get an AI boost?
Ten Cap portfolio manager Jun Bei Liu isn't binning her fund's holdings in REA, Pro Medicus, TechnologyOne, or Xero shares.
While Liu has cut the Ten Cap Alpha Plus Complex ETF (ASX: TCAP)'s exposure to a number of ASX 200 tech stocks amid weak market sentiment and a surge in ASX mining shares, she's holding onto these four.
Why?
According to Liu (courtesy of The Australian Financial Review):
These companies will continue to deliver multi-year growth. AI will actually increase cost efficiencies, and their client base is extremely sticky compared to other software businesses that have been sold off.
Commenting on the past months' selling pressure on most every ASX 200 tech stock, Liu added:
Some of these growth businesses that have been sold off on fear are going to keep delivering results, and if they do, the market will eventually realise they have been oversold… We are seeing an incredible amount of opportunities in some of those companies whose valuation have come down to multi-year lows; to us, these are very rare.
