The best ASX tech stocks to watch in 2024

Discover the best tech stocks on the ASX for 2024. Explore top companies driving innovation and growth in Australia's thriving tech sector.

By Investor Observer team

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30 October 2024

If you're looking to add tech stocks to your portfolio, you might be on the right track.

With their natural growth potential, tech stocks have historically outpaced the rest of the market over longer timeframes.

For instance, since 2010, the tech-heavy Nasdaq 100 index has surged 950%, while the S&P 500 saw a more modest gain of 480%.

While many investors associate tech stocks with Silicon Valley, Australia plays a vital role in this industry.

The Australian Stock Exchange (ASX) hosts a thriving tech sector, home to some of the largest companies in the Asia-Pacific region.

(The ASX technology sector is captured by the S&P/ASX All Technology Index.)

In this article, we’ll dive deep into which tech companies to invest in—or at least keep an eye on—focusing on ASX tech stocks with strong fundamentals.

10 best tech stocks ASX-listed

Here’s our ASX tech roster—a curated shortlist of the top 10 picks, spanning fintech firms, software companies, artificial intelligence developers, and gaming studios.

Block (ASX: SQ2)
Megaport (ASX: MP1)
Novonix (ASX: NVX)
Xero (ASX: XRO)
Iress (ASX: IRE)
Hansen Technologies (ASX: HSN)
Emyria (ASX: EMD)
BrainChip (ASX: BRN)
PlaySide Studios (ASX: PLY)
Universal Biosensors (ASX: UBI)

10 best ASX technology stocks to invest in 2024

Below is the overview of each Australian stock to buy from our top ASX roster.

Block (ASX: SQ2)

Block is a well-known name in the fintech world.

Launched in 2009 by Twitter co-founder Jack Dorsey, Block went public about six years later. Since then, it’s become a leading fintech payment provider, managing platforms like Square, Cash App, and the Australian buy-now-pay-later service Afterpay.

Block also supports businesses with full-service payment processing capabilities.

The company is tapping into the rising demand for mobile payments and digital assets. In its latest quarter, Block generated $16.6 billion in revenue, marking an 11% increase from the same period a year ago.

Profitability has also improved, with $195.3 million in earnings compared to a $122.5 million loss a year earlier.

Unlike some other tech stocks, SQ2 has grown in value over the past year. Its market cap now stands at around $44 billion, and there is potential for more growth as consumers continue to favor mobile payment solutions.

Megaport (ASX: MP1)

Megaport is a cloud service provider offering “network-as-a-service” solutions to over 2,700 enterprise clients worldwide.

It allows businesses to build and manage secure network connections, supporting global networks without the hefty investment in physical infrastructure.

With a pay-as-you-go model and flexible contracts, Megaport helps companies scale capacity on demand. Notably, it’s also an Amazon AWS Direct Connect ecosystem partner.

In 2024, Megaport delivered strong revenue growth and reached profitability. The company reported $128.2 million in revenue for fiscal 2024, marking a 28% jump from 2023.

Net income came in at $6.3 million, a notable turnaround from the $6.4 million loss the previous year.

Though based in Australia, Megaport’s North American operations are thriving, now making up 57% of total revenue.

After a substantial rally earlier this year, MP1 stock has dipped slightly in 2024.

Novonix (ASX: NVX)

Novonix is a battery materials company serving the electric vehicle and energy storage markets.

Founded in 2009, it focuses on developing and testing lithium-ion batteries—the go-to choice for EVs and various green energy applications.

NVX is an up-and-coming tech stock with significant upside as the global economy shifts toward clean energy, though this growth potential also brings volatility.

With a market cap of around $265 million, NVX has seen its fair share of ups and downs over the past few years.

While the company isn’t profitable yet, it held $47.1 million in cash as of the quarter ending June 30.

Novonix continues to invest heavily in R&D and has secured several European patents for its battery tech.

The company’s innovation has been recognized with awards like the Reuters Global Energy Transition Award for R&D achievement.

Xero (ASX: XRO)

Xero is a tech ASX stock focused on delivering cloud-based accounting software.

Founded in 2006 in Wellington, New Zealand, Xero primarily serves small business owners, providing software that automates essential accounting and bookkeeping tasks.

The platform integrates with over 1,000 third-party apps, enabling small business owners to manage taxes, payroll, and payments seamlessly.

The company now serves more than 4.2 million customers, mostly in Australia, New Zealand, and the United Kingdom. Its user base has expanded by an impressive 51.8% since 2021.

In fiscal 2024, Xero reported $1.714 billion in operating revenue, reflecting a 22% increase over the previous year.

Adjusted earnings surged by 75% to $527 million. This strong performance has driven XRO’s share price to around $150, pushing its market cap beyond $22.5 billion.

Year-to-date, XRO is up over 36%, ranking it among the top technology stocks on the ASX.

Iress (ASX: IRE)

Iress is an Australian fintech company offering software and market data solutions for the financial services and investment management sectors.

Its tools help financial professionals access and manage the extensive data they need daily.

With over 500,000 users worldwide, including more than 10,000 business clients, Iress’ software is widely used by financial services brands, wealth advisers, banks, insurers, and stockbrokers.

IRE stock is backed by strong fundamentals, with the company reporting a 52% surge in adjusted earnings for the first half of 2024.

Iress’ leadership attributed this growth to “transformative initiatives” and “disciplined capital management,” including the sale of two platforms.

In April, Iress sold its U.K. mortgage business to Bain Capital for $167 million.

ASX fintech stocks like IRE have performed well in 2024. IRE’s share price is up 25% year-to-date.

Hansen Technologies (ASX: HSN)

Hansen is a software provider primarily serving the energy, utilities, and communications sectors.

Its tools are used by enterprise clients across more than 80 countries, with over 600 clients in the energy and communications industries supporting the needs of over 60 million end customers.

Hansen holds multiple industry certifications, including ISO, SOC, ISEA, and ITIL.

HSN stock has had a bumpy year, though its fundamentals are on the rise. Performance-wise, HSN has been steady this year, holding a market cap of just over $1 billion.

For fiscal 2024, Hansen reported $351.1 million in revenue, a 13.2% increase from the previous year. Core business revenue rose 7.3% year over year, and the company maintained profitability.

The stock is down 2.4% year-to-date, presenting a potentially attractive entry point for new investors.

Emyria (ASX: EMD)

Emyria operates at the intersection of healthcare and technology, specializing in data-driven drug development and clinical care.

The company primarily focuses on new treatments for mental health and PTSD, which it identifies as one of the fastest-growing healthcare challenges.

Founded in 2018, Emyria is still a relatively young company.

While its revenue has been growing significantly, so have its losses. The company’s net revenues rose by 38% in fiscal 2024, but its net losses widened by 123%.

EMD is certainly a penny stock, with a market capitalization of under $15 million.

While investors should brace for volatility, there’s an attractive entry point for those who believe mental health is a critical area that needs attention.

This positions EMD as one of the top tech stocks to keep an eye on moving forward."

BrainChip (ASX: BRN)

BrainChip is an emerging technology company specializing in artificial intelligence processing chips and machine learning hardware.

Its flagship product, MetaTF, is designed for a variety of applications, including video surveillance, industrial automation, and autonomous vehicles.

BRN stands to gain from the global shift toward AI, automation, and electric vehicles.

However, like the broader AI sector, BrainChip has faced a bumpy road in 2024.

Despite securing a new Australian patent for neural network development, the company’s profitability and revenue from continuing operations declined in the first half of the year.

Still, BRN stock is up 23% this year.

On another positive note, the company raised $25 million in capital in July, strengthening its balance sheet as it ramped up R&D efforts.

PlaySide Studios (ASX: PLY)

PlaySide Studios is Australia’s largest independent video game developer, with titles across PC, console, mobile, and virtual reality platforms.

The company has made a strategic shift into the metaverse—a sector that researchers predict could become a multi-trillion-dollar opportunity by the end of the decade.

Alongside its extensive library of original games, PLY has forged partnerships with some of the biggest names in entertainment, including Disney, Nickelodeon, and Warner Bros.

PLY just wrapped up a strong fiscal 2024, achieving a 78% increase in revenues compared to the previous year and reporting a profit margin of 17%, a significant turnaround from a net loss in 2023.

With a market capitalization of just under $200 million, PLY effectively trades as a penny stock.

For investors, this means potential for short-term volatility but also greater upside opportunities in the future.

The stock traded at nearly $1 in March before falling 50% in the latter half of 2024.

Universal Biosensors (ASX: UBI)

Universal Biosensors produces and commercializes diagnostic testing equipment primarily for the healthcare and agri-food industries.

Its biosensor test strips are used in point-of-use devices, enabling healthcare practitioners to monitor blood glucose levels, blood clots, and the effects of certain therapies on their patients.

Since its incorporation in 2001, Universal Biosensors claims its technology has facilitated over 10 billion diagnostic tests worldwide.

In the second quarter, the company reported 25% revenue growth, although its net losses widened compared to the previous year.

Most of its revenue comes from Australia, with the Americas and Europe contributing the rest.

UBI trades as a penny stock, making it highly volatile.

The stock peaked in late 2021 and has been on a downtrend ever since. UBI is down 33% this year so far.

Investors who believe in the growth potential of the biosensor industry and see UBI as one of the emerging tech stocks might find its current price to be an attractive entry point.

Understanding Australian tech sector

Australian tech stocks represent a vast industry that contributes hundreds of billions of dollars to the country's economy.

The technology sector adds around $167 billion to Australia’s GDP, making up about 8.5% of the total economy.

Tech companies also employ over 860,000 workers, positioning them as Australia’s seventh-largest employment sector.

The economic contribution of the technology sector has steadily grown over the past decade, expanding at more than four times the rate of the overall economy.

Key industries within the tech sector include software development, hardware manufacturing, cloud computing, fintech, and e-commerce.

It’s no surprise that Australia’s largest cities—Sydney, Melbourne, Brisbane, and Canberra—are home to the country’s technology superclusters.

While ASX technology stocks encompass companies from around the globe, Australia is also home to several major tech firms with multibillion-dollar market caps.

Notable companies include Atlassian, Xero, Hansen Technologies, WiseTech Global, Computershare, Carsales.com, NextDC, and the recently acquired Afterpay.

Australia’s tech superclusters are also nurturing a growing artificial intelligence ecosystem.

According to the Commonwealth Scientific and Industrial Research Organization (CSIRO), Australia’s AI industry could reach $315 billion by 2028, driven largely by the increasing adoption of AI technologies.

Research from Export Finance Australia indicates that 68% of Australian businesses have already integrated AI into their operations.

As the AI sector continues to expand, investors can anticipate more AI-focused companies listing on the ASX.

Among our top 10 tech stocks, BrainChip stands out as a leading AI company, alongside others like Appen, Ai-Media Technologies, and Bigtincan Holdings.

With the rise of artificial intelligence, Australia’s tech industry is expected to keep growing, outpacing other sectors of the economy.

Additionally, the country’s mining industry is likely to benefit from the growth of AI and electric vehicles, given the increasing demand for lithium-ion batteries, a key area where Australia is a major producer and exporter."

The risks of investing in tech stocks on the ASX

For all the benefits of investing in transformative technology, ASX tech stocks come with their share of risks.

Unlike traditional industries, the technology sector is highly volatile due to its fast-paced innovation, intense competition, and the speculative nature of many tech startups.

This speculative element means that emerging tech stocks can easily become overvalued, as investors focus more on future growth expectations than on current business fundamentals.

When those fundamentals finally catch up to inflated price targets, even the hottest tech stocks can face sharp sell-offs and extended consolidation periods.

For every successful tech stock, countless others fail to adapt to shifting consumer trends.

As E&Y pointed out, many tech companies struggle to keep pace with rapid market disruptions and "increasingly sophisticated and fragmented consumer demands."

The most extreme example of this was during the Dot Com Bubble, when more than half of the companies didn’t survive.

The tech industry also faces legal risks, as it often takes time for regulations to catch up with technological advancements.

Even top tech stocks have encountered regulatory scrutiny regarding data privacy, user protections, and alleged monopolistic practices.

New regulations and antitrust actions could significantly impact how tech companies operate.

In recent years, tech companies reliant on critical minerals like semiconductors have also contended with supply chain and geopolitical risks stemming from rising trade tensions with China.

Supply chain disruptions can hinder business operations, inflate costs, and erode profitability.

Are tech stocks on the ASX a good investment?

As history has shown, Australian tech companies can be highly profitable investments.

The tech industry in Australia is rapidly expanding, positioning IT stocks to capitalize on both domestic and global demand for emerging trends like cloud computing, cybersecurity, e-commerce, and AI.

However, finding the best tech companies to invest in isn’t without its challenges.

Certain segments of the industry have been hit hard since the Reserve Bank of Australia and other global central banks began raising interest rates.

The good news is that central banks are cutting rates again to stimulate growth and investment.

For tech companies, this means a lower cost of capital and the potential for higher valuations as reduced rates enhance the value of future cash flows.

Lower rates can also attract more investment capital to the sector, resulting in higher stock prices and valuations.

Ultimately, investors aiming for higher returns on tech investments should be ready for increased volatility.

For this reason, technology investments should be part of a broader diversification strategy that includes various industries and asset classes.

FAQ

Are tech stocks worth buying?

Despite recent volatility, tech stocks are still a good investment choice, as they have historically outperformed the broader stock market.

If you're more risk-averse in the short term, it's wise to concentrate on established IT stocks in high-growth sectors with solid fundamentals.

Is it a good time to buy tech stocks?

Investment legends like Benjamin Graham and Warren Buffett are all cautioning against trying to time the market.

The risk in “waiting for the right time” is that investors might miss out on significant gains on a few days that are impossible to predict.

For long-term investors, it's always a good time to buy tech stocks with strong earnings and sound business models.

Regardless of the economic cycle, resilient businesses tend to outperform over the long haul.

What are the top 10 tech stocks to buy?

While every list may differ based on individual investing styles, goals, and risk profiles, here are our top 10 tech stocks on the ASX as of October 2024:

Block (ASX: SQ2)
Megaport (ASX: MP1)
Novonix (ASX: NVX)
Xero (ASX: XRO)
Iress (ASX: IRE)
Hansen Technologies (ASX: HSN)
Emyria (ASX: EMD)
BrainChip (ASX: BRN)
PlaySide Studios (ASX: PLY)
Universal Biosensors (ASX: UBI)

How will tech stocks do in 2025?

The outlook for 2025 is promising for top emerging tech stocks, as advancements in AI and machine learning continue to unlock new investment opportunities.

Analysts also predict multiple rate cuts worldwide, creating a favorable environment for investors looking to shift from fixed income to higher-growth stocks.

What are the best AI stocks ASX?

Some of the most promising AI stocks on the ASX include BrainChip (ASX: BRN), NextDC (ASX: NXT), Appen (ASX: APX), Bigtincan Holdings (ASX: BTN), and Ai-Media Technologies (ASX: AIM).