Xero Ltd (ASX: XRO) shares have been smashed over the past year, with the share price crashing around 62% from an all-time high of $196.52 recorded in June last year.
The ASX tech stock has faced several major headwinds over the past 12 months.
The falling share price is mostly the result of a sector-side sell off of technology stocks. This followed rising concerns that AI could disrupt traditional software models.
In late-2025 and early-2026 many investors were spooked by the idea that smarter, cheaper tools could reduce the need for subscription platforms like Xero. Sentiment for tech shares quickly turned south.
At the same time, a sharp increase in the value of some ASX tech shares in 2025, including Xero, also sparked concerns that tech companies were overvalued and overdue a price correction.
Image source: Getty Images
Where are Xero shares trading now?
At the time of writing, Xero shares are trading at $74.16 a piece.
For the year to date, the shares are now around 34% lower and they're 60% below the trading value in late May last year.
Are Xero shares now too cheap to pass up?
Analysts are incredibly bullish on Xero shares, with widespread anticipation that we'll see some significant upside over the next 12 months.
Market Index shows brokers have a strong buy rating on the shares. They tip a 87% upside to $141.56 over the next 12 months.
TradingView data shows something similar. Out of 15 analysts, 14 have a buy or strong buy rating and one has a hold rating. They tip a potential average upside of up to 76% to $130.81 a piece over the next 12 months.
However, some analysts think the increase could be far steeper. The maximum $236.45 target price implies that Xero shares have the potential to soar 218% higher. It's also an increase from a maximum $229.49 target price the analysts had a month ago.
What is expected to drive the tech shares higher?
I see Xero as an attractive long-term investment.
The company has a sticky subscription revenue, which means its customers are likely to keep paying for its services and products over a long time. Switching to an alternative accounting, invoicing, and payroll system would be time-consuming for businesses, so many customers could easily stay subscribed for years.
This makes Xero's revenue more predictable.
At the same time, the company is still a relatively small market player. This means there is a huge amount of potential future growth globally.
These growth opportunities include expansion in the UK and US, as well as payroll and workflow automation offerings. Xero is also actively expanding its presence and its product suite.
The company's latest FY26 result shows the company is growing, too. It posted a 31% hike in operating revenue in mid-May, and its adjusted EBITDA is up 18%.
