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3 ASX tech shares worth buying now to hold for years

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Is the bloodbath over for technology stocks?

That’s what many investors, especially those who dipped their toes in over the past 2 years, will be thinking.

The S&P/ASX All Technology Index (ASX: XTX) is down 23% since November, which is testing the patience of growth investors

But could such a dip present some bargains?

Medallion Financial managing director Michael Wayne reckons it currently does “make sense” to consider buying some “quality names” with a view to holding them for at least 2 to 4 years.

“Markets tend to get overly negative on the downside and overly optimistic on the upside,” he told Switzer TV Investing.

In the current situation, Wayne likes the look of 3 ASX tech shares in particular:

Wayne’s team has high conviction that Xero Limited (ASX: XRO) shares are a bargain at the moment.

The stock price for the accounting software maker has plummeted around 28% for the year so far, closing Wednesday at $102.93 after hovering around $100 for most of the day.

“Xero’s one we’ve actually been buying over the last week or so,” he said.

“Anything sub-$100 we think, on a long-term basis, will be fairly attractive.”

Wayne is not sure why the Xero share price has been through wild volatility in the past 12 months, but he has much faith in the underlying business.

“It’s a very high-quality business,” he said.

“They’ve turned profitable in the last 12, 18 months. They continue to grow very nicely in the UK and US, and continue to chip away in Australia and New Zealand.”

‘Basically a monopoly’

Audio technology maker Audinate Group Ltd (ASX: AD8) has been an investment that Wayne has spruiked for some time now.

Despite losing one-third of its value since 10 December, he’s still keeping the faith.

“We still like it. We think it’s very good quality,” said Wayne.

“The fact that it’s basically a monopoly in that space at the moment, growing many multiple times the nearest competitor, we think it’s worth persisting.”

Audinate’s flagship product is Dante, which is a network protocol that allows audio equipment at large venues to talk to one other without wires.

Wayne attributed the recent struggles to COVID-19-related supply chain issues, which is not a chronic problem and shows continuing demand.

Network-as-a-service provider Megaport Ltd (ASX: MP1) has seen its share price plunge 27% so far in 2022.

But Wayne is licking his lips at this discount because the company showed very positive numbers in last month’s financials.

“When you consider Megaport was $20 not that long ago, and $13 at the moment — and the business has fundamentally improved, then we’re confident,” he said.

“This is a company that’s meant to be turning profitable in the next 6 months or so.”

Wayne’s not the only fan of Megaport, with Firetrail portfolio manager Matthew Fist last week singing its praises.

“If you become a Megaport customer, in the first year you’re going to spend $1. Every single year after that, you increase the amount you spend with Megaport by 45%,” he said.

“This makes Megaport, in our view, one of the highest quality companies on the ASX.”

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