The Australian tech sector is home to a number of ASX shares that have significant growth potential.
This could make them great options for investors that are willing to make patient buy and hold investments.
For example, three ASX tech stocks that brokers think have very bright futures and could be in the buy zone now are listed below.
Here's what you need to know about them:
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Life360 Inc (ASX: 360)
Life360 could be a fantastic ASX tech stock to buy.
It is the location technology company behind the eponymous Life360 app. This app is used by millions of families worldwide. A recent update revealed that its global monthly active users (MAU) increased by 4.9 million during the first quarter to 66.4 million.
This is underpinning significant revenue and earnings growth. And with management focusing on increasing both its average revenue per user metric and paid subscribers, as well as venturing into advertising, Life360's growth outlook appears very positive.
Morgan Stanley is confident on its outlook and recently put an overweight rating and $17.50 price target on its shares.
Megaport Ltd (ASX: MP1)
The second ASX tech stock that could be a buy is Megaport.
It is the leading global provider of elastic interconnection services. Megaport's software layer provides users with an easy way to create and manage network connections. Through its network, businesses can deploy private point-to-point connectivity between any of the locations on Megaport's global network infrastructure.
Due to the structural shift to the cloud and higher spending on enterprise networking, the company has been growing at a rapid rate and appears well-placed to continue doing so in the coming years.
Citi is a big fan of the company and believes there will be a multi-year spend on cloud infrastructure coming and this will support structural growth for Megaport.
The broker put a buy rating and $16.05 price target on its shares last week.
Xero Ltd (ASX: XRO)
A third ASX tech stock that analysts rate as a buy is Xero.
It is a global small business platform with a total of 4.2 million subscribers. The company notes that its smart tools help small businesses and their advisors to manage core accounting functions like tax and bank reconciliation. In addition, they can complete other important small business tasks like payroll and payments.
Goldman Sachs is very bullish about the company due largely to its quality and significant growth opportunity.
Its analysts highlight that Xero is "very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM."
Goldman currently has a buy rating and $164.00 price target on its shares.
