ASX 200 tech shares are continuing to recover from a 48% sector smash between 29 August 2025 and 30 March 2026.
So far, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has recovered by an impressive 26% in just over two months.
By comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) has lifted 2.5% over the same time period.
Fears over how artificial intelligence (AI) may impact software-as-a-service (SaaS) businesses, in particular, contributed to the 48% rout.
However, James Gerrish from Shaw and Partners reckons software stocks have now bottomed, and there are good buys to be had.
In his regular Market Matters newsletter this week, Gerrish named three ASX 200 tech shares that his team is "long and bullish" on.
He says these stocks are well-placed for growth in 1H FY27, and all three are held in the team's Active Growth Portfolio.
Let's find out why.
Image source: Getty Images
WiseTech Global Ltd (ASX: WTC)
The WiseTech share price is $40.12, down 3% today and down 41% in the calendar year to date (YTD).
Since the ASX 200 tech sector turned a corner on 31 March, Wisetech shares have underperformed, lifting just 10%.
The Market Matters team sees 30% to 40% upside over the next 12 months for Wisetech shares.
Gerrish explained:
… we view WiseTech as more likely to be an AI beneficiary than a victim.
Its enormous logistics dataset, entrenched customer relationships and central position within global supply chains provide a strong foundation for embedding AI into the platform, potentially improving productivity, automation and customer outcomes while further strengthening its competitive moat.
The company has already said AI will allow it to reduce its workforce by around 30%, which, if executed well, would have a meaningful positive impact on margins and the bottom line.
With the stock now trading around 60% below its five-year valuation average — albeit from very elevated growth multiples — the risk/reward looks increasingly appealing in our opinion.
Xero Ltd (ASX: XRO)
The Xero share price is $80.96, down 3.5% today and down 28% YTD.
Since 31 March, Xero shares have recovered 15%. Like Wisetech, Xero is underperforming its ASX 200 tech sector peers for now.
Gerrish commented:
Despite the launch of its premium Ultra tier, the rollout of Xero's AI-powered assistant and continued momentum in the US, the market remained focused on disruption risk, particularly following Anthropic's unveiling of AI tools aimed at small businesses.
The bear case is that increasingly capable AI agents could automate many of the bookkeeping, reconciliation and administrative tasks that have traditionally underpinned accounting software.
The bull case is that Xero's competitive advantage extends far beyond the user interface, encompassing proprietary transaction data, deep banking integrations, regulatory compliance capabilities and thousands of bank feeds that would be difficult for any AI-native challenger to replicate at scale.
With Xero now trading ~65% below its 5-year valuation, albeit extremely high in the first place, we like the risk/reward ~$80.
We can initially see ~20% upside for XRO from the $80 area…
TechnologyOne Ltd (ASX: TNE)
The TechnologyOne share price is $32.35, down 2.2% on Thursday and up 16% YTD.
Since the ASX 200 tech sector pivoted on 31 March, TechnologyOne shares have lifted 22%.
Gerrish said:
We regard TNE as one of the best-positioned local software names to capitalise on AI.
Its strength lies in deep domain expertise across local government, higher education, healthcare and corporate services — specialised sectors where AI can enhance productivity, but where generic models often struggle with regulatory complexity, data security and operational nuance. Management has also been proactive in embedding AI across the product suite.
The core attraction remains TechnologyOne's business model. Its software supports mission-critical functions including finance, payroll, human resources, assets and student administration, creating high switching costs and strong revenue visibility.
… TNE's entrenched customer base, sector-specific expertise and recurring revenue model position it as one of the few ASX software companies whose competitive advantage may actually strengthen as AI adoption accelerates. The market clearly agrees for now.
We like the risk/reward around ~$32, initially seeing 20–25% upside from current levels.
