Forget Xero shares! Broker tips this top ASX tech stock for 24% gains

If you bought Xero Ltd (ASX: XRO) shares back on 6 January 2023, and opted to sell those shares on 20 June 2025, you would have booked a tidy 170.6% gain.

But if you’d instead bought shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider on 20 June 2025, and decided to sell them today, you’d be nursing a loss of 66.5%.

And Xero shares don’t pay dividends, so there’s no passive income relief there.

Which brings us to booming ASX tech stock SKS Technologies Group Ltd (ASX: SKS).

SKS Technologies designs and installs electrical, audiovisual and communications networking systems into the data centre, government and corporate sectors. And the rapid rollout of AI technology has helped send the ASX tech stock soaring.

Currently trading for $8.34 a share, the SKS Technologies share price is up a whopping 143.2% since this time last year, smashing the 1.1% 12-month loss posted by the All Ordinaries Index (ASX: XAO).

And, unlike Xero shares, SKS paid two fully franked dividends over the last year, totalling 10 cents a share. This sees the ASX tech stock trading on a fully franked trailing dividend yield of 1.2%. That equates to a grossed-up yield of 1.7%, once we take those franking credits into account.

Why the ASX tech stock looks like a better buy than Xero shares

The team at Canaccord Genuity believe SKS Technologies can continue to outperform in the months ahead.

In a bullish note addressing the company’s growth, released in August, the broker said:

Going into FY27, we expect further scale benefits and see the 2H margin of +12% as maintainable even when accounting for the fact that each additional staff member could be less efficient than their current staff base.

We also think SKS realises genuine efficiency benefits as contracts scale, which should limit margins retracting and instead provide upside potential to our estimates over time.

Canaccord has a buy rating on the ASX All Ords tech stock with a price target of $10.30 a share.

That represents a potential upside of 23.5% from the current share price. And it doesn’t include any upcoming dividends.

What did SKS Technologies report for FY 2026?

SKS Technologies released its FY 2026 results on 18 August.

Highlights included a 33.0% year-on-year increase in revenue to $347.93 million. And earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 80.8% to $42.4 million.

Comparing that to Xero shares, Xero reported a 31% year-on-year increase in revenue to $2.75 billion, while EBITDA of $757.4 million was up 18%.

On the bottom line, SKS achieved a 93.2% increase in net profit after tax (NPAT) to $27.11 million.

Due to its Melio acquisition costs, Xero’s FY 2026 NPAT of $167.4 million was down 27% from the prior year.

The post Forget Xero shares! Broker tips this top ASX tech stock for 24% gains appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Sks Technologies Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.