Zip Co Ltd (ASX: ZIP) shares have enjoyed an impressive rebound recently, climbing 31% over the past month as investor confidence has returned to the buy now, pay later (BNPL) provider.

Despite that strong run, the stock remains down around 6% year to date. Over the past 12 months, however, Zip shares have gained approximately 2%.

Looking at the bigger picture shows why many investors still see plenty of recovery potential. Zip shares remain about 64% lower than they were five years ago, while the S&P/ASX 200 Index (ASX: XJO) has risen roughly 20% over the same period.

With analysts becoming increasingly optimistic about the company’s earnings outlook heading into FY27, could the recovery still have plenty of room to run?

Strong financial momentum

One of the biggest reasons for the improving sentiment is Zip’s strengthening financial performance.

The fintech company’s results have consistently improved over the past several quarters as management has focused on profitability, disciplined lending, and tighter cost controls.

Its third-quarter FY26 update in April highlighted accelerating momentum across the business. Importantly, management upgraded its FY26 group cash EBITDA guidance to at least $260 million, up from previous guidance of around $248.6 million.

The earnings upgrade demonstrated that Zip is successfully balancing growth with profitability. That’s a key milestone for Zip shares after several challenging years for the BNPL sector.

The US is becoming increasingly important

Another major attraction is Zip’s expanding opportunity in the United States.

The company has been investing heavily in growing both its customer base and product offering in what is now its largest market. The US BNPL market remains significantly underpenetrated compared with Australia and continues to benefit from increasing consumer adoption and merchant demand.

Late last year, Zip expanded its partnership with programmable financial services company Stripe, allowing more merchants to offer Zip’s payment solutions through Stripe’s platform. The partnership provides access to a large network of businesses and could accelerate merchant acquisition over time.

Adding to the opportunity, Zip is pursuing a dual listing on the Nasdaq. A US listing of Zip shares could improve the company’s visibility among American investors, increase liquidity, and potentially support future expansion initiatives in its largest growth market.

Fierce competition, increased volatility

Of course, investors should remember that Zip operates in a highly competitive industry.

The company faces competition from Klarna, PayPal, Block’s Afterpay business, traditional banks, and credit card providers. Intense competition could weigh on margins or slow customer growth.

As a growth stock, Zip is also sensitive to changes in investor sentiment, interest rates, consumer spending, and employment conditions. That means Zip shares are likely to remain more volatile than many defensive businesses.

What are the experts saying?

According to TradingView data, analysts remain overwhelmingly positive on Zip’s outlook.

Of the 12 analysts covering the company, 11 have either a buy or strong buy recommendation. Their average price target of $4.17 suggests around 36% upside from current levels.

Some analysts are even more bullish, with the highest price target sitting at $5.59 per share, implying potential upside of roughly 82%.

United Capital Partners (UCPS) is also constructive on Zip shares, arguing that the market is underestimating the company’s disciplined cost management and long-term US growth opportunity.

The broker has a 12-month price target of $4.85, which implies potential upside of around 58%. If Zip continues delivering stronger earnings while successfully expanding in the US, that target may not be out of reach.

The post Why brokers think Zip shares could soar 50% or more in FY27 appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The NEXTDC Ltd (ASX: NXT) share price is in focus after the company announced a major boost to its senior debt facilities, increasing available funding to $8.7 billion to support ongoing data centre expansion and growth.

What did NEXTDC report?

• New senior debt facilities of $2.3 billion secured, upsized from the $1.8 billion announced in May 2026
• Total available senior debt facilities increase from $6.4 billion to $8.7 billion
• Margins on new facilities broadly consistent with existing debt of similar tenor
• Proceeds to support data centre development, recent customer contract wins, and general corporate purposes

What else do investors need to know?

NEXTDC’s upsized debt reflects ongoing strong demand for its services and continued support from a broad syndicate of local and international banks. The funding builds upon recent capital raising initiatives, including a $1.5 billion Entitlement Offer, $1.7 billion Hybrid Securities Offer, and a $750 million Wholesale Notes Offer, further diversifying NEXTDC’s funding sources.

Financial close of the new facilities is expected in mid-July 2026, pending satisfaction of standard conditions. The company’s growing capital base positions it to accelerate growth following a record increase in contracted utilisation earlier this year.

What’s next for NEXTDC?

With expanded funding in place, NEXTDC is well positioned to support capital expenditure linked to recent contract wins and continued rollout of state-of-the-art data centres. The company maintains a strong focus on operational sustainability, leveraging renewable energy and efficiency, supporting further growth in Australia’s digital infrastructure market.

Investors can expect NEXTDC to continue innovating and scaling its platform to meet rising demand for secure, sustainable, and connected cloud and IT infrastructure solutions.

NEXTDC share price snapshot

Over the past 12 months, NEXTDC shares have risen 21%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 2% over the same period.

View Original Announcement

The post NEXTDC boosts funding with $2.3 billion senior debt facility upsize appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

ASX tech shares had a rough FY26.

WiseTech Global Ltd (ASX: WTC) was the worst performer in the entire ASX 200 in FY26, dropping 70% in value.

In May, it handed over its status as the ASX’s largest technology company by market capitalisation to Xero Ltd (ASX: XRO). Xero has itself fallen significantly from its all-time high of $196.52.

Both need a turnaround.

But the path back for these ASX tech shares looks very different for each.

WiseTech: The turnaround is a governance story more than a business story

The crucial thing to understand about WiseTech’s collapse is what did not cause it.

The CargoWise platform remains used by 23 of the world’s top 25 global freight forwarders. Switching costs are so high that customer retention has remained strong throughout the governance turmoil.

Importantly, WiseTech has maintained its FY26 guidance, expecting revenue of US$1.39 billion to US$1.44 billion with EBITDA margins of 40% to 41%.

The business has not broken. What has broken is investor trust in the governance around the business. This has been driven by a series of allegations against founder Richard White, including an AFP investigation into alleged trafficking matters.

Since then, a new Chair has been appointed, which is the first concrete governance action since the Richard White allegations escalated.

For a sustained WiseTech turnaround, the market needs three things: resolution of the legal matters, clear separation between founder influence and board independence, and an FY26 full-year result in August that confirms guidance has been met.

Bell Potter carries a buy rating with a $71.75 price target, noting that, depending on the August result, FY27 forecasts could prove conservative.

JP Morgan, however, downgraded WiseTech to hold with a $40 target following the governance concerns. This serves to illustrate how divided the broker community is on the timing of the recovery.

The business case for WiseTech is not in dispute. The governance case is.

Xero: The turnaround is about valuation and execution for this ASX tech share

Xero’s challenge is different.

There are no governance concerns, no AFP investigations, and no allegations against management.

The FY 2026 result delivered 31% revenue growth to $2.75 billion, with the US business surging 240% on the back of the Melio acquisition.

The reason Xero shares have fallen from their peak is almost entirely about valuation.

At its high, Xero traded at well over 100 times earnings, a multiple that assumed many years of rapid, uninterrupted growth.

As interest rates rose and growth investors rotated into value and resources, the multiple compressed dramatically, even as the underlying business kept delivering.

The turnaround for Xero is therefore simpler but not necessarily faster in practice.

It requires the market to reaccept a premium valuation for a high-growth SaaS business, which in turn requires interest rates to fall, earnings growth to accelerate, and the US expansion to keep demonstrating that FY26’s 240% revenue growth was not a one-off.

On the broker level, Goldman Sachs carries a buy rating on Xero with a $205 price target, implying significant upside at current levels.

Perhaps encouragingly, the company has authorised a NZ$550 million buyback for FY27, a direct signal of management’s confidence in the share price at current levels.

The common thread for these ASX tech shares

Despite their different problems, both stocks share one thing: the market has sold them down in a way that disconnects the share price from the operational reality of each business.

Another article on the Motley Fool AU noted recently that

WiseTech is grappling with rebuilding investor confidence after governance-related uncertainty, while Xero is navigating a broader reassessment of software valuations. In both cases, the recent rally may reflect a shift in sentiment rather than a full reversal of trend.

A turnaround for WiseTech requires governance resolution. A turnaround for Xero requires the market to re-price a business that has kept growing, even as the share price has not.

Both are possible in FY27, but neither is guaranteed.

Foolish Takeaway

WiseTech and Xero are two very different ASX tech shares wearing the same label.

WiseTech needs to fix its governance before the share price can sustainably recover, regardless of how good the CargoWise business actually is. Xero needs the macro environment and its own US execution to align before the market will restore the premium valuation the business arguably deserves.

Patient investors in both stocks are betting that FY27 delivers on those conditions.

It is a reasonable bet, but not a certain one.

The post Two ASX tech shares hinge on rebuilding trust and growth. Here’s how they can turn around appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven 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 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.