These FTSE 100 stocks could catapult forward as AI gets cheaper

The FTSE 100 isn’t often associated with artificial intelligence. However, as we move towards the next phase of the revolution, UK companies could prosper.

| More on:
Young brown woman delighted with what she sees on her screen

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

DeepSeek — the Chinese artificial intelligence (AI) lab responsible for market chaos on 27 January — looks set to make AI cheaper and more accessible. This will likely hasten the development of AI-powered platforms and the adoption of this revolutionary technology. Having seen Nvidia and other ‘picks and shovels’ stocks surge, it’s likely time for FTSE 100 companies to benefit.

Let’s not forget that the overarching objectives of AI, at least for businesses, is productivity gains. This means companies should be able to achieve more with fewer resources. Lower headcounts, higher output, and hopefully, stronger earnings.

So, who could benefit? Well, in the long run, I’d expect this revolution to touch every company as AI extends into robotics. However, there could be some near-term winners of cheaper AI, including Sage Group (LSE:SGE) and Experian (LSE:EXPN).

Should you invest £1,000 in Experian Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Experian Plc made the list?

See the 6 stocks

Sage Group

Sage, a leading software company known for its accounting and payroll solutions, has been actively integrating AI into its products. With the advent of more cost-effective AI models like DeepSeek’s — or at least using some of DeepSeek’s innovations — Sage could significantly enhance its offerings without incurring substantial costs. The introduction of its Copilot tool exemplifies this, allowing finance teams to quickly identify budgeting errors and improve efficiency.

Created with Highcharts 11.4.3Sage Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Moreover, as AI becomes cheaper and more accessible, Sage can leverage these advancements to further develop its AI capabilities, potentially attracting new customers and retaining existing ones. The company’s recent 20% share price jump following promising full-year results indicates strong market confidence, which could be bolstered by the integration of more affordable AI solutions. This positions Sage well to capitalise on the growing demand for intelligent business tools in an increasingly competitive market.

However, given it trades at 34 times forward earnings, investors may wish to tread with caution. Personally, I think Sage is an interesting proposition, but the valuation coupled with the approximately 15% growth rate isn’t overly tempting.

Experian

Experian, a global leader in data analytics and consumer credit reporting, stands to benefit from the rise of cost-effective AI technologies as well. The company relies heavily on data-driven insights to provide value-added services to its clients. With new models enabling cheaper and more efficient data processing capabilities, Experian could enhance its analytics services significantly.

Created with Highcharts 11.4.3Experian Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Moreover, the ability to deploy advanced AI at lower costs and in greater numbers allows Experian to refine its predictive models and improve risk assessment tools, which are essential for financial institutions and businesses alike. As the demand for sophisticated data analytics continues to grow, Experian’s enhanced capabilities could lead to increased market share and revenue growth.

Interestingly, Experian stock trades with very similar multiples to Sage. And at 34 times earnings, even with a decent earnings growth rate of around 15%, investors may want to investigate more before making a decision. Personally, I’m adding Experian to my watchlist, but I’m not buying at the current multiples.

Should you invest £1,000 in Experian Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Experian Plc made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Fox has positions in Nvidia. The Motley Fool UK has recommended Experian Plc, Nvidia, and Sage Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Are these 2 of the best dividend stocks to consider buying in these uncertain times?

Searching for safe-haven dividend stocks to buy? Here are two from the FTSE 100 and FTSE 250 I think merit…

Read more »

Investing Articles

Up 55% in a year, this FTSE 100 stock is on fire! 

A short-and-sweet trading update sent the Games Workshop (LON:GAW) stock jumping to an all-time high in the FTSE 100 index…

Read more »

Investing Articles

Is today’s 15% jump in the Aston Martin share price the start of a stunning recovery?

And with one bound it was free! Harvey Jones is dazzled by today's mighty leap in the Aston Martin share…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Up 10% today, can Games Workshop shares continue to soar?

Games Workshop is one of the FTSE 100's brightest shares at the start of 2025. Can it keep its multi-year…

Read more »

Investing Articles

An investor who put £10,000 into BAE Systems shares at the start of the year would already have…

BAE Systems shares have made a stellar start to 2025, as the FTSE 100 weapons maker benefits from today's troubled…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

If a 30-year-old invested £250 a month in UK stocks, here’s what they might have by 65

Harvey Jones says the earlier people start investing, the better. And a 30-year-old can take advantage of the biggest investment…

Read more »

Investing Articles

Will the Ocado share price hit £1 or £10 over the next 5 years?

Noting a big thumbs down to the retailer’s 2024 results, our writer considers how the Ocado share price might perform…

Read more »

Growth Shares

2 reasons why the Rolls-Royce share price could hit £10 by year-end

Jon Smith explains why the Rolls-Royce share price has popped higher again and details why the move could keep going…

Read more »