ASX tech shares have been through a brutal repricing, and there is strong disagreement about what comes next.
The S&P/ASX All Technology Index (ASX: XTX) is down more than 27% over twelve months.
Two names capture the argument better than the index does.
One has halved while brokers argue over what it is worth.
The other has risen while brokers and the market draw opposite conclusions from the same result.
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Why ASX tech shares have been repriced
Three things happened at roughly the same time.
The Reserve Bank raised the cash rate three times this year to 4.35%, which is hard on companies valued on distant earnings.
Several high-multiple names missed expectations during reporting season.
Investors also began seriously debating whether artificial intelligence erodes software business models rather than enhancing them, a fear now nicknamed the "SaaSpocalypse".
To illustrate the complex nature of the ASX tech market, WiseTech Global Ltd (ASX: WTC) grew FY26 revenue by 79% and underlying profit by 29%, and the shares still fell 10% on the day.
Good numbers are not being rewarded at the moment.
Xero: where the brokers disagree with each other
Xero Ltd (ASX: XRO) is down about 52% over twelve months and a long way below its $166.00 high.
The FY26 result was not the problem.
Operating revenue rose 31% to NZ$2.75 billion and annualised monthly recurring revenue climbed 37% to NZ$3.27 billion.
Free cash flow reached NZ$554 million at a 20.1% margin, and subscribers grew 11% to 4.92 million.
The complications sit underneath the headline.
Net profit fell 27% to NZ$167.4 million on Melio integration costs, and gross margin slipped from 89% to 83.9% as payments changed the revenue mix.
Roughly 5% of the register is now sold short, a record for the company.
Chief executive Sukhinder Singh Cassidy pointed to the United States as a catalyst for future growth:
Our strong full year results demonstrate Xero's disciplined execution and macro-resilience. Our 3×3 strategy is hitting its stride, demonstrated by accelerating US growth with 110,000 new customers, including new Melio direct payments customers.
Megaport: where the brokers disagree with the market
Megaport Ltd (ASX: MP1) is a mirror image of the previous two companies.
The company's shares sit near $16.73 and are up about 23% over twelve months.
FY26 revenue rose 37% to $312.2 million, while group annual recurring revenue jumped 62% to $395.2 million.
EBITDA reached $77.1 million on a 25% margin.
Then the market read the rest of it.
The company swung to a $39.0 million net loss, and FY27 guidance calls for capital expenditure of $1.28 billion to $1.38 billion after raising close to $1 billion.
As a result, shares fell about 20% across five sessions.
Chief executive Michael Reid saw things differently:
FY26 produced an exceptional result. Group Annual Recurring Revenue increased by 62% to $395.2 million, revenue grew by 37% to $312.2 million, and EBITDA reached $77.1 million. These are incredible results and we're only just getting started.
Analysts have sided with him.
Megaport carries nine buy ratings with no holds or sells and an average target near $24.99.
FY27 revenue guidance of $620 million to $730 million implies growth of at least 100%.
Foolish takeaway for these ASX tech shares
All of these ASX tech shares ask you to look deep into the future to understand why these companies may be attractive investments.
Xero asks whether a business growing revenue at 31% deserves a price-to-earnings ratio near 99 while its margins compress.
For its part, investors in Megaport will be asking whether $1.3 billion of capital expenditure produces the returns management expects.
