I think it is fair to say that ASX tech shares have had a rough ride lately.
Concerns about artificial intelligence (AI) disruption, stretched valuations, and shifting competitive dynamics have led to sharp selloffs across the sector. Some investors are wondering whether the golden era of tech investing is over.
I would argue the opposite. The easy gains may be gone. But the long-term opportunity is far from finished.
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Tech is infrastructure now
Technology is no longer a niche sector. It is the backbone of modern business.
Companies rely on cloud software, data analytics, cybersecurity, and automation to operate efficiently. Governments depend on digital systems. Consumers live increasingly online.
Take WiseTech Global Ltd (ASX: WTC). Its CargoWise platform underpins global logistics operations. Switching costs are high, integration is complex, and customers depend on it to manage trade flows. That kind of embedded software is not easily replaced.
Or look at TechnologyOne Ltd (ASX: TNE). It provides mission-critical software to governments and universities. These are long-term contracts with high retention rates, not speculative consumer apps.
These businesses are not optional add-ons. They are operational foundations.
AI disruption cuts both ways
There is no denying that artificial intelligence is changing the landscape.
Some fear it could lower barriers to entry and compress margins. But AI can also strengthen leading platforms, improve productivity, and create entirely new revenue streams.
Companies with scale, data, and established customer bases are often better positioned to harness AI than smaller competitors.
When releasing its half-year results this week, WiseTech CEO, Zubin Appoo, said:
We continue on our deliberate AI transformation journey. AI is strengthening our advantage, enabling significantly more automation and value for our customers, embedding our products more deeply into their daily operations, and unlocking levels of efficiency gains across WiseTech that were previously out of reach.
The winners are likely to be those that integrate AI into existing ecosystems rather than those starting from scratch.
Volatility creates opportunity
ASX tech shares tend to trade on long-term growth expectations. When sentiment shifts, valuations can fall quickly.
For patient investors, that can create entry points.
Consider Xero Ltd (ASX: XRO). While its share price has been volatile, the business continues to expand internationally and deepen its product suite. If subscriber growth and monetisation remain strong, earnings power over the next decade could look very different from today.
Foolish takeaway
Digital transformation is not complete. Nor are automation and cloud adoption.
Technology will likely play an even larger role in the global economy in five to ten years than it does today.
As a result, I think there's still a strong case for holding ASX tech shares in a portfolio right now.
