Clients should consider buying TNE if they believe the current sell-off in ASX technology stocks has been indiscriminate and that mission-critical enterprise software serving governments and universities is not materially threatened by AI disruption.
Current Advice: Sell TNE at market
| Portfolio | Long / Short | Expected Hold Period | Volatility | Exchange |
| Discretionary | Long | Long-term | High | ASX |
Latest Update: 01 May 2026
Our buy thesis from February, which leaned into the deeply oversold conditions in ASX tech and management’s upgraded FY26 guidance, has played out faster than expected. The stock has recovered strongly as the AI-disruption narrative around mission-critical ERP has faded and the market has refocused on the underlying earnings trajectory. With the shares now trading closer to fair value and the easy money from the sentiment rebound behind us, the risk-reward is no longer as compelling. The H1 result in May is unlikely to provide a meaningful catalyst given the biannual Showcase timing, and we would rather lock in profits now than hold through a potentially flat period.
Latest Update: 22 February 2026
The ASX technology sector has experienced one of the most violent sell-offs in its history. The S&P/ASX 200 Information Technology Index is down over 20% year-to-date, with its RSI hitting 19, the most oversold reading since the dot-com bust and well below levels reached during the pandemic or the GFC. Within this carnage, TechnologyOne has fallen around 22% to roughly $20, its lowest level since mid-2024. We believe this presents an attractive entry point for a business whose fundamentals have actually improved during the sell-off.
To understand why, it helps to understand what TechnologyOne actually does. The company provides enterprise resource planning software to Australian and UK governments, councils, and universities. Think of it as the system these organisations use to manage their finances, HR, payroll, student records, and asset registers. These are not optional tools. They sit at the core of how these institutions operate, and ripping them out to replace them with something else is an expensive, multi-year undertaking that most organisations would rather avoid.
This is the key point the market appears to be missing. The fear driving this sell-off is that artificial intelligence will make traditional software obsolete. And for some categories of software, that concern has merit. Generic productivity tools, simple dashboards, and lightweight workflow apps could face real pressure. But TechnologyOne’s products are not in that category. No council is going to hand its financial reporting system over to an AI chatbot, and no university is going to manage student enrolments through a tool it built in a weekend using a large language model. The regulatory, compliance, and audit requirements alone make that impractical.
What makes this opportunity particularly compelling is that management has upgraded its FY26 guidance to 18-20% pre-tax profit growth and 16-18% annual recurring revenue growth, targeting the top end of both ranges. That guidance was issued at the AGM in late 2025, well after the AI disruption narrative had taken hold. In other words, management is seeing the actual performance of the business and telling the market it is accelerating, while the share price goes in the opposite direction. That kind of divergence between what a company is doing and what its share price is doing tends not to last.
Bell Potter recently upgraded TNE to a buy recommendation with a $29 price target, noting that even after reducing the multiples they apply to reflect the current environment, the stock offers more than 15% upside. They acknowledged that the H1 result in May may not provide a dramatic catalyst, since PBT growth in the first half is expected to be high single digits due to the timing of biannual Showcase events. But the full-year numbers should deliver, and that visibility is what makes TNE an attractive place to deploy capital today.
Importantly, TechnologyOne is also well advanced in its cloud transition, which has meaningfully improved the quality of its earnings. Recurring revenue has risen, cash generation has strengthened, and earnings visibility has improved. The UK expansion provides a long runway for growth that is still in early stages. The company has a stated ambition to double the size of the business roughly every five years, and its track record of disciplined execution gives us confidence in that target.
We should be upfront about the risks. The first is that the broader technology sell-off could have further to run. Sentiment is poor, and when markets are in this kind of mood, fundamentals can take a back seat for longer than feels rational. TNE could trade lower from here in the short term even if the business continues to perform well. The second risk is that AI disruption proves broader and faster than we expect. We think it is unlikely that mission-critical ERP for governments is in the firing line within any reasonable investment horizon, but technology moves quickly and we could be wrong. These are risks worth acknowledging, even as we believe the current price more than compensates for them.
For investors who do not already own TNE, we recommend buying at market. For those with existing positions, this is an opportunity to add. The combination of upgraded guidance, deeply oversold conditions, a sticky customer base, and a strong competitive position in a market where AI is more likely to enhance the product than replace it makes this one of the most attractive risk-reward setups on the ASX today.
