The Collapse of WAAAX Shares: What Comes Next For ASX Tech?

Australia’s celebrated WAAAX basket, once the ASX’s answer to Wall Street’s FAANG group (also disbanded), has been effectively dismantled by corporate acquisitions, structural disruption, and a brutal valuation reset that has left two of its surviving members trading near decade lows in 2026. With Afterpay absorbed into Block Inc., Altium delisted after a landmark Japanese buyout, and Appen reduced to a shadow of its former self, the question now is who fills the void?

The WAAAX Era: A Reckoning

The WAAAX acronym of WiseTech Global, Afterpay, Altium, Appen, and Xero emerged in the late 2010s as a shorthand for Australia’s most exciting technology growth stories. At their collective highs, these five companies commanded valuations that rivalled some of the largest industrial names on the ASX, drawing comparisons to Silicon Valley’s finest and attracting a wave of investors who were hungry for domestic tech exposure. That era of names is now definitively over.

Three of the five original members have either been acquired, delisted, or rendered structurally impaired. As for the two survivors (WiseTech Global and Xero), whilst they remain significant players in the ASX tech space, their share prices this year tell a story of selling pressure and multiple compression.

WiseTech shares are down 52.82% year-to-date, while Xero has shed 48.15% and just printed a new 2020s low of A$57.51. Together, they encapsulate the broader compression that has swept through high-multiple technology names globally, compounded in each case by company-specific headwinds that have amplified the damage.

What Happened to The WAAAX Stocks?

Afterpay was the most spectacular exit from the basket. Acquired by Jack Dorsey’s Block Inc. in a landmark A$39 billion all-stock deal, it represented the pinnacle of the global Buy Now, Pay Later boom and validated Australian fintech on the world stage. Today, Block trades on the ASX under the ticker XYZ and has posted gains of 11.93% year-to-date, with a market capitalisation of US$46.58 billion. The integration of Afterpay alongside Cash App and Square has begun to generate synergies, though the BNPL segment continues to face regulatory scrutiny and pressure from elevated interest rates on bad-debt provisioning.

Altium’s exit was equally notable, if less dramatic. Japanese semiconductor giant Renesas Electronics acquired the printed circuit board design software company for A$9.1 billion (A$68.50 per share in cash) with the stock delisting from the ASX in August 2024. For long-term shareholders, it was a handsome reward but for the ASX technology sector, it removed one of the most reliably cash-generative software businesses from the domestic market, thinning the quality end of the local tech index.

Appen’s story is the most sobering. Once a darling of the machine-learning data annotation space, the company suffered a structural collapse when major enterprise clients including Google and Meta redirected spending toward foundational large language models and AI that require far less traditional human-annotated training data. Despite having stock added 41.86% this year to hold a market cap just over A$325million, the stock has fallen 95% in 6 years. While management has attempted a pivot toward generative AI evaluation services, the company continues to report operating losses and has yet to demonstrate a credible pathway back to sustainable profitability.

WiseTech: Operational Strength, Governance Storm

Of the two surviving WAAAX names, WiseTech Global presents the more complex investment case.

The CargoWise platform remains a genuinely dominant force in global freight management software, reporting revenue growth of 79% to A$1.396 billion in FY26, a figure that would be the envy of most enterprise software businesses anywhere in the world. Customer churn remains low, the platform’s integration depth creates formidable switching costs, and the company’s international expansion continues to gain traction.

Yet the stock has been cut in half year-to-date, and the reasons extend well beyond macro valuation compression. The Australian Competition and Consumer Commission executed search warrants as part of a regulatory investigation, and founder and long-time chief executive Richard White has faced sustained scrutiny over corporate governance practices. Restructuring costs tied to an AI-driven organisational overhaul have added further noise to the earnings picture, making it difficult for markets to price the business with confidence.

Trading at A$32.45, up 12.45% from its 52-week low of A$28.76 hit in late June, WiseTech shares carry a price-to-earnings ratio of 43.26 and offers a modest dividend yield of approximately 0.7%.

Xero: Growth Ambition at a Steep Price

Xero’s situation is different, yet the outcome is broadly similar. The company pursued an aggressive expansion into the United States through the acquisition of payments platform Melio, targeting a US$29 billion small-business payments market. FY26 operating revenue rose 31% to NZ$2.8 billion and the subscriber base expanded to 4.92 million globally; metrics that, in isolation, would typically support a premium valuation.

The problem is the price tag attached to that growth, with the stock trading at a P/E ratio of 71.18 times. This leaves little margin for error, whilst the Melio integration has introduced margin compression, higher operating expenses, and a shift into net debt that has unsettled markets. Xero shares‘ decline to A$57.51, levels last seen in 2019, reflects a market that is no longer willing to pay peak multiples for growth stories that are simultaneously burning capital and facing the existential question of surviving the AI world of today and future.

The New Contenders

With the WAAAX framework retired, markets have begun assembling a new mental model for ASX technology leadership. The names gaining traction in 2026 are either infrastructure plays benefiting directly from AI and cloud buildout, or they are defensively positioned enterprise software businesses with sticky recurring revenues and more digestible valuations.

Megaport has been the standout performer of the group, surging 67.31% year-to-date to A$19.91 with a market capitalisation of A$4.74 billion. As a provider of Network-as-a-Service, Megaport facilitates the high-speed, multi-cloud interconnectivity that underpins both enterprise cloud migrations and the increasingly bandwidth-intensive demands of artificial intelligence workloads. The company has moved into positive free cash flow territory and is demonstrating meaningful operational leverage as its customer base scales, a combination that has attracted significant market attention.

Dicker Data has been the quiet achiever, rising 50.74% year-to-date to a market capitalisation of A$2.78 billion. Trading on a price-to-earnings ratio of just 25.92, it is one of the most attractively valued names in the sector. The company distributes enterprise technology hardware and software across Australia and New Zealand, and has benefited from a confluence of enterprise hardware refresh cycles, AI-enabled PC and server deployments, and cloud security infrastructure spending. Its consistent fully franked dividend distributions add a further layer of appeal relative to the zero-yield, high-multiple growth names that dominated the WAAAX era.

TechnologyOne has delivered a more modest 4.20% year-to-date gain but remains one of the most respected enterprise software franchises on the ASX, with a market capitalisation of A$9.50 billion. Its ERP platforms, tailored for government, higher education, and health sectors, generate highly predictable SaaS recurring revenues with exceptionally low customer churn. The trade-off is a price-to-earnings ratio of 67.62 and a dividend yield of just under 1%, which leaves the stock exposed to the same multiple-compression risk that has weighed on Xero, though TechnologyOne’s more defensive end-market mix provides a degree of insulation.

NextDC rounds out the new cohort with a market capitalisation of A$8.79 billion, down 6.24% year-to-date. As Australia’s primary data centre operator, it occupies a strategically irreplaceable position at the intersection of cloud infrastructure and AI compute demand. The challenge is one of timing and capital intensity: building out next-generation high-density AI data centres requires enormous upfront expenditure, and the lag between capital deployment and earnings contribution has weighed on the stock in a high interest rate environment. Markets broadly accept the long-term thesis but are demanding patience.

A Tech Landscape That Does Not Float All Boats

The transition from WAAAX to this new generation of ASX technology names reflects a broader maturation of the domestic sector. The era of paying 100-times earnings for growth at any cost has given way to a more discriminating framework that rewards infrastructure relevance, earnings visibility, and valuation discipline.

WiseTech and Xero are not broken businesses, but their recoveries are contingent on resolving the specific overhangs that have driven their respective sell-offs. For the new contenders, the opportunity is real but not without risk.

What is clear is that the ASX technology sector in 2026 is a more complex, more differentiated landscape than the one that gave birth to WAAAX. The easy narrative of five high-growth names riding a decade-long multiple expansion has been replaced by a sector that demands genuine analysis of business models, balance sheet strength, and the specific ways in which individual companies are positioned to benefit from the structural forces reshaping global technology.