Why investors are piling back into these ASX tech shares today

Shares in several ASX tech companies are pushing higher on Friday as investors return to the sector after weeks of heavy selling.

Among the strongest performers are WiseTech Global Ltd (ASX: WTC), Xero Ltd (ASX: XRO), and Megaport Ltd (ASX: MP1), which are all posting solid gains.

At the time of writing, the WiseTech share price is up 7.42% to $51.10, the Xero share price has climbed 5.78% to $88.74, and the Megaport share price is rising 5.04% to $8.33.

The rally comes after a difficult period for ASX tech stocks, many of which were recently trading near their 52-week lows.

Let’s take a closer look at what could be driving today’s move.

Bargain hunters return to beaten-down tech stocks

One key reason behind the rebound appears to be investors stepping back into the sector after a sharp sell-off earlier this year.

Over the past several months, technology shares on the ASX have been under heavy pressure as global markets turned more cautious. Rising geopolitical tensions and market volatility pushed many investors toward defensive sectors such as energy and commodities.

However, that heavy selling left many technology companies looking oversold.

WiseTech Global, Xero, and Megaport had all fallen heavily from their previous highs and were trading at 52-week lows in February.

For bargain hunters, this created an opportunity to buy high-quality growth companies at much lower prices.

Technical indicators indicate a potential bottom

Technical indicators also suggest the recent selling pressure may be easing.

Several ASX tech stocks recently tested the lower Bollinger Band, which can signal a stock may be oversold and nearing a short-term bounce.

In addition, the relative strength index (RSI) for many tech names fell toward oversold levels during the recent market decline.

Recent price action in WiseTech Global and Xero suggests investors believe the worst of the selling pressure has now passed.

Strong growth outlook still supports the sector

Beyond short term trading moves, the long-term outlook for many ASX technology companies remains strong.

WiseTech Global continues to benefit from rising demand for logistics and supply chain software globally. Xero remains a major player in cloud accounting for small businesses, while Megaport is expanding its global network connectivity platform.

These companies are still exposed to long-term structural trends such as digital transformation, cloud computing, and data infrastructure growth.

If global technology sentiment continues to improve, today’s rally could mark the beginning of a broader recovery for the sector, particularly if investors continue rotating back into growth stocks after the recent market sell-off.

The post Why investors are piling back into these ASX tech shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.