Buy these ASX tech shares: Goldman Sachs

Although the tech sector has been booming recently, that doesn’t necessarily mean it’s too late to buy some ASX tech shares.

For example, the two tech shares listed below have just need named as buys by analysts at Goldman Sachs. Here’s what the broker is saying about them:

Data#3 Limited (ASX: DTL)

The team at Goldman Sachs believes this IT services company could be a top ASX tech share to buy.

The broker is positive on Data#3 for a number of reasons. This includes its backlog of high-margin orders and its attractive valuation relative to its strong long-term growth outlook. It explains:

As the relatively high-margin backlog converts over CY23, and Services revenue growth outpaces Software, we believe that group GP margins can grow in FY23E and into FY24E. […] Valuation is attractive in the context of DTL’s position as a leading beneficiary of increased IT spending in Australia across structural growth areas of software, IT services and cloud/networking infrastructure. NTM P/E of 23x compares favourably to a +21% FY22-25E EPS CAGR, particularly when considering DTL’s defensive government exposure.

Goldman has a buy rating and a $9.30 price target on its shares. This implies a potential upside of 25% over the next 12 months.

Macquarie Technology Group Ltd (ASX: MAQ)

Goldman thinks very highly of Macquarie Technology. It is a leading cloud, data centre, cyber security, and telecommunications company.

The broker feels that the winds are firmly in the company’s sails and is expecting stellar earnings growth over the coming years. One of the drivers of this is expected to be the emergence of generative AI services such as ChatGPT. In respect to generative AI, the broker said:

[W]e expect AI to catalyse a third wave of demand for data centre providers in Australia as GenAI workloads shift from LLM training (generally done offshore) to inference and enterprise use cases (in Australia). The clearest beneficiary across our IT Services coverage is MAQ and its portfolio of DC assets in Sydney/Canberra, helping drive medium-term demand from hyperscalers and enterprises.

Goldman has a buy rating and a $77.20 price target on the ASX tech share. This implies a potential upside of over 17% from current levels.