2 excellent ASX tech shares with strong growth potential

These tech shares are highly rated for a reason…

| More on:
women with a microphone is happy whilst using a computer

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you're interested in adding a tech share or two to your portfolio, then you may want to look at the two listed below.

These two ASX tech shares have been rated as buys and tipped to grow strongly over the long term. Here's why they could be excellent options:

Appen Ltd (ASX: APX)

The first ASX tech share to look at is this artificial intelligence (AI) data services company.

Its shares have come under significant pressure over the last 12 months due to concerns over the softening of demand for its services during the pandemic from some of its biggest customers.

Positively, management appears to believe this weakness is only temporary and the issues it is facing aren't structural. It is expecting demand to rebound strongly once trading conditions return to normal.

In addition to this, management has announced plans to evolve into a provider of a broad range of AI data annotation products and solutions. It believes this will unlock growth in new markets.

Citi remains positive on Appen. Earlier this month it retained its buy rating and $18.80 price target on the company's shares. Citi notes that some of its biggest customers have reported an acceleration in ad revenue growth. It feels this could be a positive for Appen.

Nitro Software Ltd (ASX: NTO)

Another ASX tech share to look at is Nitro Software. It is a software company that is aiming to drive digital transformation in organisations around the world via its Nitro Productivity Suite. This product provides integrated PDF productivity and electronic signature tools to customers.

Demand for its offering continues to grow thanks to its quality and a number of positive industry tailwinds. This includes the global shift to remote and digital work. It has also just made a key acquisition that expands its total addressable market and an agreement with Salesforce that could boost sales.

Nitro recently released its second quarter update and revealed a 56% increase in its annualised recurring revenue (ARR) to US$33.8 million. This puts it on track to achieve its FY 2021 guidance for ARR of between US$39 million and US$42 million.

Wilsons is very positive on the company. It recently retained its overweight rating and lifted its price target to $4.22.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Record Highs

Xero and 2 other ASX tech shares cracking all-time highs on Thursday

The price peaks follow a significant lift in the NASDAQ overnight following Republican Donald Trump's US election victory.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Market News

Appen share price lifts 5% on oversubscribed SPP results

The technology company has announced the results of its Share Purchase Plan.

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
AI Stocks

Why is the BrainChip share price surging 17% today?

The stock has caught a strong bid today.

Read more »

a man dressed in a green superhero lycra outfit stands in a crouched pose with arms outstretched as if ready to spring into action with a blue sky and oil barrels lying in the background.
Technology Shares

The great Australian ASX Green Tech rally is starting now

The future could be bright – and green, experts say.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Technology Shares

Why are WiseTech shares catching heat this time?

The news continues on for WiseTech.

Read more »

A man smiles as he holds bank notes in front of a laptop.
Technology Shares

ASX 200 tech stock lifts on $2.9 billion funding news

The ASX 200 tech stock is getting a boost from $2.9 billion in new funding arrangements.

Read more »

Five happy friends on their phones.
Technology Shares

2 exciting ASX tech shares to buy and hold for 10 years

Brokers believe these shares could be great options for growth investors.

Read more »

A view of competitors in a running event, some wearing number bibs, line up together on a starting line looking ahead as if to start a race.
Technology Shares

Here's how the ASX 200 market sectors stacked up last week

ASX technology shares led the market with a 2.48% increase last week.

Read more »