I think the Australian share market is home to a good number of tech companies that have the potential to grow materially in the future.
Two which I think are among the best on offer right now are listed below. Here's why I would buy and hold them:
Appen Ltd (ASX: APX)
The first ASX tech share I would buy and hold is Appen. Its crowd-sourced team of experts prepare the high quality data that goes into artificial intelligence (AI) and machine learning models. This is an incredibly important part of the process, as without high quality data a model will suffer. Unsurprisingly, this means its services are in great demand from businesses across the world. This includes the likes of Facebook and Microsoft.
Another positive is that governments are intending to spend big on artificial intelligence in the future. Appen notes that the US government currently has a US$5 billion AI budget and the UK government has a £2.3 billion AI budget. This should be good news for its Figure Eight business, which has a long history in the sector. Overall, I believe the company is well-placed to grow its earnings at a strong rate over the next decade. And although the Appen share price recently hit a record high, I would still invest if you're making a long term investment.
Pushpay Holdings Group Ltd (ASX: PPH)
Another ASX tech share that I would buy and hold is Pushpay. It provides a donor management system, including donor tools, finance tools, and a custom community app to the faith sector. It has been growing at a very strong rate over the last few years and looks set to continue this positive form in FY 2021. Pushpay recently upgraded its guidance for FY 2021 to earnings before interest, tax, depreciation, and amortisation (EBITDA) of US$50 million to US$54 million. This compares to its previous guidance of US$48 million to US$53 million and will be at least double FY 2020's EBITDA.
The good news is that it still has a very long runway for growth over the coming years. Management is aiming to grow its revenue to US$1 billion revenue later this decade. This is almost 8x FY 2020's revenue of US$127.5 million. Given its sizeable opportunity in a niche market and its leadership position within it, I expect the company to achieve its goals. This should mean there's still plenty of upside ahead for the Pushpay share price over the next few years.
