Interest surrounding artificial intelligence (AI) and tech stocks has exploded in recent years.
It’s perhaps no wonder given the latest innovations in AI look set to drastically impact the world of business.
Most well-known AI stocks are listed on US stock exchanges. However, there’s now an increasing number of British companies active in this space.
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With that in mind, here’s a look at two UK shares I’d consider for my portfolio as part of my strategy to cash in on the AI revolution.
A FTSE 250 company showing competitiveness and growth
Computacenter (LSE:CCC) is a leading independent IT and services provider. The company is trusted by a range of large corporate and public sector organisations.
Computacenter aims to help customers source, transform, and manage their technology infrastructure. This is with the aim of delivering digital transformation, including through the use of AI.
In March 2023, Computacenter delivered flat annual profit, but said revenues in the current year had been extremely buoyant.
The company reported pre-tax profit of £249m compared with £248m over the previous year. On an adjusted basis, earning were up 3.2%, to £263m.
The key risks for Computacenter are market shifts in technology usage, which would make what the company does less relevant.
However, in my view, the company’s success up to this point is mostly thanks to a programme of well-executed investments that have ensured competitiveness and fuelled growth.
Looking ahead, I’m excited by Computacenter’s further growth prospects, particularly in the expanding North America segment. Here the company looks well-placed to capitalise on businesses looking to transform amid the AI revolution.
Using AI to deliver award-winning projects
Fellow FTSE 250 firm Kainos (LSE:KNOS) is a provider of digital technology solutions and workday deployments. Its ultimate aim is to help organisations increase the efficiency of their operations.
In so doing, the company leverages a range of AI-driven techniques. These include machine learning, natural language processing, and knowledge mining.
Kainos has now delivered AI solutions to hundreds of global customers. This includes implementing an award-winning risk rating tool that identifies fraud for UK government departments.
Last month the company reported that full-year results reflected consensus forecasts, with revenue of between £351.7m and £378m, and adjusted pre-tax profit of £66.1m to £68m.
Kainos cites its excellent customer service as a key driver of customer satisfaction and retention, with this subsequently underpinning revenue growth.
However, buying Kainos shares for my portfolio wouldn’t come without its risks. For starters, the company has a relatively high price-to-earnings ratio of around 31. This means Kainos is quite an expensive stock at its present valuation, which increases the risk I’d be taking on with a potential investment.
That said, against a backdrop of sustained market demand, I’m confident the company can continue to deliver transformation programmes to new and existing clients across a range of sectors.
As a result, if I had spare cash to buy some UK shares that I think would enable me to capitalise on the AI revolution, I’d look no further than Computacenter and Kainos.
