Sydney, Feb 7, 2026, 17:12 (AEDT) — The market has closed.
- Xero settled at A$81.76 on Friday, slipping 0.4%. The stock touched a session low of A$79.25.
- The stock has dropped roughly 14% over the past week, leaving it hovering near its lowest point in the past 52 weeks.
- Growth stocks could see moves as traders eye next week’s data and what central-bank speakers have to say—rate expectations are still in play.
Xero Ltd dipped 0.4% to finish at A$81.76 on Friday, keeping the accounting software group parked close to its 52-week lows before the ASX opens again on Monday. Shares moved between A$79.25 and A$82.16 during the day, still feeling the effects of a turbulent week. 1
This marks the end of a tough run. Xero has dropped roughly 13.9% from its close seven days ago, according to Morningstar figures cited by Intelligent Investor—a drop big enough that even minor mood swings in the market now hit the stock harder. 2
The reason this matters right now? Software valuations are under fresh pressure. Growth stocks—especially those relying on faith in future earnings—have been taking hits as traders reassess them. Investors are also split over what “agentic” AI, the kind that operates independently, will do next: will it drive costs lower, or end up eroding prices?
Xero is doubling down on the narrative. The company, in a Tuesday market release, spotlighted what it called a “global AI and US payments” play, rolling out demos for its JAX AI agents and Melio, the US payments business it’s been rolling into the stack since picking it up in October. CEO Sukhinder Singh Cassidy said Xero is “deeply focused on capturing the global AI and US accounting plus payments TAM” — that’s total addressable market. 3
Still, the jitters linger. Stephen Innes at SPI Asset Management said this week that “artificial intelligence stopped being framed as a margin accelerator” and has started to look like a structural threat for certain software stocks—prompting investors to hit the sell button fast, but hesitate on the way back in. 4
It’s not just nerves at home. U.S. software and data services names kept falling Thursday, with investors on edge over the potential for AI tools to shake up the sector. The S&P 500 software and services index has now lost roughly $1 trillion in market value since late January, according to Reuters. “I would classify this as a sell-everything mindset at this point,” Dave Harrison Smith, chief investment officer at Bailard, told Reuters. 5
Wall Street found its footing Friday, with chip names rallying as investors zeroed in again on the AI infrastructure spending spree, Reuters said. The earlier slide this week still lingered in the background. That rebound could lift sentiment as Monday approaches, but the deeper question—who really comes out ahead as AI rolls on—remains unsettled. 6
Rates just got another bump. The Reserve Bank of Australia raised its cash rate target by 25 basis points on Tuesday, pushing it up to 3.85%. That’s the first increase in more than two years. With higher rates, long-duration growth stocks often take a bigger hit, since a larger share of their value is tied to future earnings. 7
Xero’s sticking with the basics: execution, cost control. The company’s eyeing Melio adjusted-EBITDA breakeven on a run-rate basis in the back half of FY28, and plans to start issuing forward guidance on adjusted-EBITDA with its FY26 results. That’s a move investors are bound to interpret as a nudge—watch spending, watch profitability, judge us on that metric.
Plenty of macro levers are set for next week, with Australia’s household spending numbers due Monday. Tuesday has Westpac consumer confidence lined up. China’s CPI lands Wednesday, then it’s U.S. CPI out early Saturday (AEDT). Mid-week, senior RBA officials are on deck for speeches. IG’s preview runs through all the key dates: 8
Risks cut both ways here. Should AI tools ramp up price competition more quickly than software companies can counter with fresh offerings, revenues could take a hit even as expenses climb. Plus, if the global “risk-off” trade makes a comeback, shares like Xero’s might drop simply on sentiment, company news or not.
Xero’s next big scheduled event lands May 14, with the FY26 results. That’s when the company plans to share more details on Melio, along with its U.S. business update.
