S&P/ASX 200 Index (ASX: XJO) tech shares were smashed over a seven-month period between late August through to 30 March this year.
The downturn led to technology being the second-worst performer of the 11 market sectors in FY26.
The S&P/ASX 200 Information Technology Index (ASX: XIJ) fell 37.22% and delivered total negative returns of 36.97%.
Tech investors had much on their minds last financial year.
Firstly, they became worried that high share price valuations and massive artificial intelligence (AI) investment in the US may create an AI bubble.
Some experts likened the AI boom to the internet boom of the late 1990s. They warned that excessive investor enthusiasm could lead to a dot-com-style correction.
That fear spread throughout the sector quickly, with ASX 200 tech shares peaking in September and entering a bear market just two months later.
A bear market is defined as a 20% (or more) fall from the most recent high point.
There were also fears that AI may decimate software-as-a-service (SaaS) providers after Anthropic released a new legal plug-in for its agentic AI assistant, Claude, in early 2026.
Within a week, shares in Thomson Reuters, whose SaaS platforms Westlaw and Practical Law serve legal professionals, had lost a fifth of its valuation.
The SaaS concern hit ASX 200 tech shares hard given four of our six largest companies by market capitalisation are SaaS providers.
Image source: Getty Images
Wisetech shares weighed the sector down
WiseTech Global Ltd (ASX: WTC), which was previously the market's largest listed tech company, was also a significant drag on the sector in FY26.
Investors were disappointed with Wisetech's FY25 earnings, released in August, and governance issues became a big distraction.
Wisetech went on to become the worst performer of the entire ASX 200 in FY26, dropping 70% in value.
The company lost its status as the sector's largest stock by market cap to Xero Ltd (ASX: XRO) in May.
A strong turnaround for ASX 200 and US tech shares began on 31 March. Since then, ASX 200 tech shares have rebounded by almost 20%.
Here are the three winners of the tech sector last financial year.
1. Codan Ltd (ASX: CDA)
Electronics solutions provider Codan delivered the best capital growth among ASX 200 tech shares in FY26.
The Codan share price skyrocketed 119.49% to finish the year at $44.14.
Codan designs and manufactures electronics solutions, including communications equipment and metal detectors, for government, corporate, NGO, and consumer clients worldwide.
The company reported a 55% increase in net profit after tax (NPAT) to $71.2 million for 1H FY26.
2. Megaport Ltd (ASX: MP1)
Megaport provides cloud and data centre connectivity services through a global network-as-a-service (NaaS) platform.
The Megaport share price ripped 49.45% to finish FY26 at $21.58.
In June, Megaport announced it had won four new AI infrastructure contracts worth $458.9 million.
The new work required significant capex, so Megaport ran a fully underwritten $827.3 million entitlement offer at $14.30 per share.
3. Data#3 Ltd (ASX: DTL)
Data#3 is an information and communications technology (ICT) provider.
The Data#3 share price rose 29.43% to $9.85 on 30 June.
Data#3 reported a 9% lift in gross sales to $1.54 billion for 1H FY26. Statutory revenue increased 8% to $423 million.
The NPAT was 3.7% higher at $23 million.
