Highlights:

  • Xero shares dropped 13.15% to AUD 83.46, down 54.11% over the past year.
  • Jefferies maintains a hold rating with a target of AUD 100.70.
  • Broader tech and AI market declines drove the fall, affecting indices globally.

Xero Limited (ASX:XRO) saw its share price fall sharply by 13.15% to AUD 83.46 on 4 February 2026, extending its one-year loss to over 54%. The drop comes as global technology stocks, including heavyweights Nvidia and Microsoft, recorded significant declines, contributing to falls across the Dow Jones (-0.3%), S&P 500 (-0.8%), and Nasdaq (-1.4%).

The ASX S&P/ASX 200 Information Technology index also fell 8.22% to 1,812.50 points.

Despite the selloff, Jefferies reiterated a hold rating on Xero shares, with a target price of AUD 100.70, indicating that the broker sees potential upside.

Focus on AI and US Expansion Continues

Yesterday, Xero hosted an investor briefing outlining its growth strategy in AI and US payments. The company showcased multiple AI agents on Xero.com and Melio’s payment solutions on both Melio.com and Xero.com. CEO Sukhinder Singh Cassidy emphasized that the company is targeting the global AI and US accounting and payments markets, positioning Xero to support small businesses in leveraging AI for operational and financial decision-making.

Xero has highlighted measurable impacts of its AI initiatives: more than two million subscribers benefit from existing AI features, while over 300,000 are actively using new generative AI capabilities introduced at Xerocon Brisbane. The company reported a 61% increase in messages through its AI agent, JAX, over three months, and over 12% of eligible subscribers accessed AI-driven business insights.

Melio Integration Aims to Boost US Performance

Xero’s acquisition of Melio continues to underpin its “Win the 3x3” strategy, combining accounting and payments to strengthen US market presence. Integration efforts include embedding Melio’s bill payment functions into Xero’s platform, unifying US go-to-market teams, and consolidating offices to realise operational synergies.

Melio is projected to reach Adjusted-EBITDA breakeven on a run-rate basis in H2 FY28. The combined Xero-Melio business targets accelerated US revenue growth, aiming to more than double FY25 group revenue by FY28, excluding expected revenue synergies.

Looking Ahead

Xero maintains its FY26 guidance, expecting operating expenses at around 70.5% of revenue, with lower ratios in H2 FY26. The company plans to provide forward guidance on an Adjusted-EBITDA basis starting May 2026. Analysts and investors will be watching closely as Xero advances AI adoption and US market penetration.

While Xero shares faced a sharp decline amid the tech selloff, the company continues to advance AI capabilities and expand its US payments business. With

Frequently Asked Questions (FAQ)

Q1: Why did Xero shares fall 13%?
A1: The drop was primarily due to broader declines in global technology and AI stocks, impacting both domestic and international markets.

Q2: What is Xero’s current broker rating?
A2: Jefferies maintains a hold rating with a target price of AUD 100.70.

Q3: How is Xero advancing its AI and US strategies?
A3: Xero is expanding its AI features on Xero.com, integrating Melio payments into the US platform, and increasing adoption of AI-driven insights among subscribers.