Xero Ltd (ASX: XRO) shares are marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider closed yesterday trading for $178.58. As we head into the Tuesday lunch hour, shares are changing hands for $180.03 apiece, up 0.8%.

This sees the share price up an impressive 33.3% since this time last year.

For some context, the ASX 200 is down 0.1% today and up 10.6% over 12 months.

Of course, those gains have all come and gone now.

The big question for ASX investors today is, can Xero shares continue to outperform heading into 2026?

Should I buy Xero shares today?

"Xero is a global accounting software provider," said Sequoia Wealth Management's Peter Day, who has a buy recommendation on Xero shares (courtesy of The Bull).

Explaining his bullish outlook for the ASX 200 tech stock, Day said:

It recently entered into a binding agreement to acquire 100% of Melio and its associated entities for an upfront consideration of US$2.5 billion (AU$3.9 billion) in cash and Xero scrip.

To date, ASX investors haven't reacted very positively to that $3.9 billion buyout. Xero shares are currently down 7.3% since shares resumed trading on 26 June, following the Melio acquisition announcement.

But Day believes Melio will offer a growth path for Xero moving forward.

"Melio, a US business-to-business payments platform, generated revenue of US$153 million in fiscal year 2025," he said.

"We expect the acquisition to expand Xero's distribution capabilities via Melio's platform. Access to new customers reinforces further brand investment potential," Day concluded.

What did management have to say about the Melio purchase?

Looking to the potential growth on offer, the United States represents Xero's largest total addressable market (TAM) segment at US$29 billion. And with Melio on board, Xero shares could see further growth as the company ramps up its presence in the US.

"Melio presents an incredibly exciting opportunity for Xero," Xero CEO Sukhinder Singh Cassidy on the day the acquisition was revealed.

Singh Cassidy added:

Adding Melio's world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform.

Xero and Melio are highly complementary. Together they complete the key jobs to be done for US SMBs, extend reach across customer segments, provide both direct and syndicated offerings, and deliver multiple revenue drivers.