2 ASX 200 tech shares this fund manager backs to survive the AI threat

ASX 200 tech shares are leading the market on Tuesday, up 6.5%, while the S&P/ASX 200 Index (ASX: XJO) lifts 2.6%.

It appears investors are buying the dip after a substantial 7.8% fall for the ASX 200 in March.

Despite the war in Iran being far from over, investors appear confident today and are looking to the tech sector for value buys.

ASX 200 tech shares have been in a downward spiral since September 2025.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) has fallen 44% since then.

The primary driver is fear over how the artificial intelligence (AI) revolution will play out.

Investors have been worried about expensive stock valuations in the US and Australia, as well as sky-high capex spending on AI.

This year, a new fear emerged: whether AI will seriously damage software-as-a-service (SaaS) providers.

This is a potent threat for ASX 200 tech shares given four of the six biggest companies by market capitalisation are SaaS providers.

Blackwattle Mid Cap Quality portfolio managers Tim Riordan and Michael Teran explain the SaaS fear:

Leading AI companies, Anthropic and OpenAI released several exciting updates in February, demonstrating exponential improvement.

These updates were also focused on industries beyond traditional software, such as Insurance and Logistics, with the focus of the AI modules to reduce friction (costs) for enterprises and consumers.

Stocks related to these “targeted” industries experienced sharp declines on this new potential AI disruption risk.

Global markets continued their rotation into value, coined the “HALO” trade (Heavy Assets, Low Obsolescence) as the market gravitates to low AI disruption risk businesses.

Riordan and Teran completed a portfolio re-jig in February following “our change in view of AI disruption in late January”.

We have concentrated capital into technology businesses which have stronger barriers (namely network effects), at highly discounted valuations, while also allowing our “HALO” winners to run.

Changes to the portfolio continue to be driven by our continuous tandem goals of improving the overall Quality Score of the portfolio whilst maintaining a highly attractive portfolio level risk/reward skew.

The managers said AI fears were “understandable” but certain ASX 200 tech businesses were “better positioned to thrive in a post AI world”.

They added: “… and going forward the market will likely focus more on individual businesses after this initial indiscriminate sell-off”.

ASX 200 tech shares this fundie is backing

Blackwattle holds the largest ASX 200 tech share, Wisetech Global Ltd (ASX: WTC), in its Mid Cap Quality Fund.

Wisetech shares have more than halved over the past six months.

The Wisetech share price is $38.66, up 2.1% on Tuesday.

Riordan and Teran said:

We view WTC as an ‘Enduring Quality’ business, as one of the highest quality companies on the ASX, continuing their multidecade customer and product growth journey.

We are excited about the FY27 and beyond outlook and see WTC as one of the few technology companies pivoting in the face of AI disruption risk.

We believe this makes a significant long-term, compounding growth profile and highly attractive Risk/Reward makes the current share price selloff a significant investment opportunity.

Blackwattle also holds telecommunications provider Megaport Ltd (ASX: MP1) in its Small Cap Quality Fund.

This ASX 200 tech share has also more than halved over the past six months.

The Megaport share price is currently $7.08, up 2.6% today.

Small-cap fund managers, Robert Hawkesford and Daniel Broeren, said Megaport was a ‘picks and shovels’ play amid the AI revolution.

The company’s competitive advantage is generated by the large number of data centers globally that it connects together with physical assets in ~1,000 data centers and a proprietary software layer, offering customers one-touch access from a central location.

The share price has been volatile in recent years and again more recently in a broader sell-off in ‘growth stocks’ and a more indiscriminate sell-off in technology stocks given fear over AI disruption…

MP1’s networking capability, however, makes it part of the ‘pick and shovels’ needed to deliver AI to corporates globally.

It is a beneficiary of AI adoption, so we see current weakness as a buying opportunity.

The post 2 ASX 200 tech shares this fund manager backs to survive the AI threat appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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 and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.