3 reasons to buy this resurgent ASX 200 tech stock today

A leading investment expert expects more growth ahead for this surging ASX 200 tech stock.

| More on:
A man with a wide, eager smile on his face holds up three fingers.

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

S&P/ASX 200 Index (ASX: XJO) tech stock Megaport Ltd (ASX: MP1) has enjoyed a remarkable turnaround in 2025.

How remarkable?

Well, on 13 January, Megaport shares closed at a more than one-year low of $6.61.

Today, shares are in the green in intraday trade, changing hands for $9.25 apiece. Or up 39.9% in just one month.

That's obviously great news to longer-term shareholders, who watched the Megaport share price tumble more than 52% from mid-March's $15.40 a share through to the end of 2024.

Of course, the resurgent performance in 2025 won't be as welcomed by the cadre of short sellers betting against the ASX 200 tech stock, with Megaport frequently counting among the top 10 most shorted stocks on the ASX this year.

But with Megaport shares already having surged 40% in a month, has the ship already sailed on this investment opportunity?

Not according to Morgans' Damien Nguyen (courtesy of The Bull), who has a buy recommendation on Megaport stock.

Why the ASX 200 tech stock could keep marching higher

The first reason to buy this ASX 200 tech stock is the massive growth potential on offer from its NaaS provisions, which connect global companies to the world's biggest technology names.

Nguyen said:

Megaport provides network-as-a-service solutions, enabling businesses to connect seamlessly with cloud service providers, such as Amazon Web Services, Microsoft Azure and Google Cloud.

Google Cloud Platform is the domain of Alphabet Inc (NASDAQ: GOOG); Microsoft Azure is owned by Microsoft Corp (NASDAQ: MSFT); and Amazon Web Services is a division of Amazon.com Inc (NASDAQ: AMZN).

Like I said, some of the biggest names in global technology.

The second reason Megaport shares are a buy is its surging earnings and return to profit.

According to Nguyen:

The company generated a net profit of $9.6 million in full year 2024, up from a loss of $9.8 million in full year 2023. EBITDA [earnings before interest, taxes, depreciation and amortisation] of $57.1 million was up 127%. Revenue of $195.3 million was up 28%.

And the third reason the ASX 200 tech stock is one to buy now is its strong management. A trait that legendary investor Warren Buffett would approve of.

"The company is well managed, and the outlook is bright. Revenue guidance in fiscal year 2025 is conservative, in our view," Nguyen said. "We suggest investors consider adding Megaport to their portfolios at these levels."

Megaport's conservating revenue guidance Nguyen refers to for FY 2025 is for revenue to come in between $214 million to $222 million. Forecast EBITDA is expected to be in the range of $57 million to $65 million.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Megaport, and Microsoft. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Technology Shares

Up 60% in two months, is it too late to buy Pro Medicus shares?

Pro Medicus has been delivering solid returns for years. Can the trend continue?

Read more »

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »

A man in a suit face palms at the downturn happening with shares today.
Technology Shares

Guess which ASX 300 share is crashing 17% on shock news

Investors are rushing to the exits on Thursday. Let's find out why.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Technology Shares

These were the best ASX 200 tech stocks to buy in May

Shareholders of these shares were smiling last month. But why?

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Technology Shares

Here's why I think these ASX tech shares are buys in June

These stocks have loads of potential.

Read more »

A young man wearing a black and white striped t-shirt looks surprised.
Technology Shares

Why did the Life360 share price rocket 51% in May?

This ASX 200 stock smashed the market last month with an incredible gain.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Up 30% since April, are Xero shares still a buy?

Xero shares have surged 30% since April, but can this SaaS leader's share price keep rising?

Read more »

A man and a woman sitting in a technology-related work environment high five each other while the man wears headphones around his neck and the woman sits in front of a laptop.
Share Market News

Strong gains for Wisetech, TechnologyOne, and Catapult amid ASX 200 tech sector lead

ASX technology shares led the market with a 3.85% increase while the ASX 200 lifted 0.88% last week.

Read more »