Xero Ltd (ASX: XRO) shares are in the green again in early morning trade on Thursday.
At the time of writing, the shares are up around 1% and changing hands at $81.49 a piece.
Today's uptick means the shares have rebounded around 33% from a seven-year low, recouping some of the losses shed earlier this year.
The stock is still around 27% lower for the year to date.
For context, the S&P/ASX 200 Index (ASX: XJO) is roughly flat in early morning trade, but around 3% higher than 12 months ago.
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What is driving the rebound of Xero shares?
The ASX 200 tech share was smashed by a sector-wide sell-off of technology stocks in late-2025. The sector came under renewed pressure in 2026 as investors continue to reassess valuations and risk appetite.
The rotation away from tech shares sent Xero's share price crashing to a multi-year low of $61.58 a piece in late-July.
But investor sentiment quickly turned a corner, likely for a couple of reasons.
There has been an investor rotation back into growth and technology stocks over the past couple of months.
At the same time, it looks like investors are now becoming more confident that the company can keep growing revenue and become more profitable.
Improved confidence comes off the back of Xero's most recent FY26 results, which it posted in May. The company reported a strong increase in its FY26 revenue, which it said was helped by subscriber growth and higher prices.
Now the question is, can the share price keep climbing higher?
What do brokers tip next for the ASX tech stock?
It looks like the market experts are still pretty confident that we'll see a significant upside ahead.
TradingView data shows the majority of brokers (five out of six) have a buy rating on Xero shares. And all forecasts imply a potential upside ahead. The average $112.17 target price implies around a 38% upside at the time of writing. But some think the shares could jump as high as 83% to $148.51 over the next 12 months.
What could drive the shares higher?
I think there is plenty of potential left for Xero shares.
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. This means the company's revenue is relatively predictable.
Xero is also still a relatively small market player within a huge global market. There are several growth opportunities ahead, including 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.
And as I mentioned above, 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 was up 18%.
