Here's the growth outlook for ASX tech shares in 2025

ASX tech shares have delivered the good this year, with the S&P/ASX All Technology Index (ASX: XTX) up 49% at the time of writing.

In other words, the broad tech sector has increased its value by roughly half so far this year, which is a major advantage over the rest of the market.

For context, the ASX equity benchmark, the S&P/ASX 200 Index (ASX: XJO), is up a mere 11% despite being dominated by some of Australia's biggest names in mining and banking.

And with the new year fast approaching, experts are bullish on the sector, saying 2025 will be another year of solid growth. Let's take a look.

Why are ASX tech shares shining?

This year, ASX tech shares have stolen the show. And it's been across the board. For instance, the S&P/ASX 200 Information Technology Index (ASX: XIJ), which tracks the IT portion of the industry, has surged by 58% this year.

This outperformance can be credited to a combination of factors. One is the impact of interest rate cuts in the US, and another is the US election outcome.

But tailwinds have formed from the artificial intelligence (AI) domain as well. Global tech companies have rushed to the front seat to pioneer AI, resulting in large money flows to the overall tech sector.

According to Firetrail Investments, "technological advancement" will be a growth driver for markets in 2025, placing ASX tech shares in a good spot. Per The ASX:

Firetrail expects several key structural trends to support global equity markets in 2025. Technological advancement is one of the most significant drivers, as businesses continue to integrate automation, artificial intelligence (AI) and cybersecurity into their operations. 

Companies with innovative solutions in digital transformation could potentially benefit from widespread digital adoption across sectors, from finance to healthcare to manufacturing.

With technology evolving at a rapid pace, businesses that can harness these advancements to improve efficiency, productivity, and customer satisfaction may have an edge. The chart below shows growth in capital investment by key US technology companies.

Firetrail also reckons tech companies could "benefit from favourable valuations" if interest rates start to come down.

Brokers are also bullish on a handful of individual ASX tech shares. For one, according to Motley Fool's Bronwyn Allen, Goldman Sachs rates Megaport Ltd (ASX: MP1) a buy with a $10.40 per share valuation.

Meanwhile, it also rates WiseTech Global Ltd (ASX: WTC) as a buy, along with a string of fellow brokers who each see plenty more upside in the stock.

But investors might want to diversify. For investors seeking a diversified set of technology stocks that tracks the overall sector, unfortunately, you cannot buy the ASX All Technology Index. It is just an index, not an investment.

However, there are various exchange-traded funds (ETFs) that track the performance of this index, such as the Betashares S&P ASX Australian Technology ETF (ASX: ATEC).

Each has its own pros and cons and must be weighed up against a broader investment strategy.

Foolish takeaway

ASX tech shares continue to shine as we approach the end of the year. Experts are bullish on the sector and its numerous stocks for 2025.

For those seeking exposure to the sector, there are multiple ways to do so, from individual stocks to ETFs.

The post Here's the growth outlook for ASX tech shares in 2025 appeared first on The Motley Fool Australia.

Motley Fool contributor Zach Bristow 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 Goldman Sachs Group, Megaport, and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2024