SYDNEY, Feb 15, 2026, 17:49 AEDT — Market closed.
Xero Ltd shares ended Friday down 4.45% at A$73.49, rounding out another rough session for Australian software names. The stock last traded with about 1.45 million shares changing hands, ASX data showed. (Australian Securities Exchange)
The drop matters because the selling has been broad and fast in a part of the market that carries premium valuations. The S&P/ASX 200 closed down 1.39% on Friday, with the information technology sector off about 5%, according to MarketIndex data. (Market Index)
Globally, the mood has turned jumpy around what AI could do to subscription software models and who gets squeezed first. “With fear driving market sentiment, investors remain in ‘sell first think later’ mode,” Barclays equity strategist Emmanuel Cau said in a Reuters report on Friday. (Reuters)
On the local tape, worries about AI overinvestment out of Wall Street fed into Friday’s selloff, pushing Xero down 4.5% and dragging other tech names with it, a news.com.au report said. Morningstar strategist Lochlan Halloway wrote in a weekly note that Xero and WiseTech had attributes that could “shield” them from the unfavourable AI sentiment, while Zerocap analyst Emir Ibrahim described a “broad de-risking move” into the weekend. (News)
The slump was not just a Xero story. WiseTech Global fell 10.4% to A$42.62 on Friday and TechnologyOne dropped 7.1% to A$20.17, as “AI” and “margins” became the two words traders kept circling, a TradingView wrap said. (TradingView)
Jefferies, in a note carried by Investing.com on Feb. 13, called the recent move an “indiscriminate” selloff in Australian software stocks. Analysts Roger Samuel and Lucy Krimmer kept a “hold” view on Xero, flagging what they see as the highest risk from AI disruption for a horizontal software provider competing with better-funded rivals such as Intuit in the U.S. They also said earnings growth could slow near term due to dilution from Xero’s recent acquisition of payments firm Melio, and they do not expect that segment to break even until the end of fiscal 2028. (Investing)
For investors, “horizontal” is just shorthand for software that sits across a lot of industries rather than one narrow niche. That can mean a bigger addressable market, but it also puts you in the line of fire when a new tool promises to automate the basics.
Xero sells cloud accounting and related tools to small businesses, with a growing push in the U.S. The Melio deal adds payments exposure, but the near-term numbers are what they are — and the market is treating anything with execution risk as optional right now.
But there is a flip side. If the AI scare trade fades, software stocks can snap back hard, and Friday’s selloff could prove to be just another shake-out. The risk is that it doesn’t fade — and that AI-driven price pressure or customer churn shows up faster than the bulls expect.
Before the ASX reopens on Monday, traders will be looking at the next run of macro catalysts that can move rates and, by extension, growth-stock multiples. An AMP preview carried by ABC flagged U.S. Federal Reserve minutes on Wednesday and Australian wages data on Wednesday, alongside a Reserve Bank of New Zealand rate decision also due Wednesday. (ABC News)
The next Xero-specific catalyst is further out. The company’s next scheduled update is its FY26 results announcement on May 14, which it has said will include updates on Melio and its U.S. performance. (ASX Announcements)
