AI Stocks With Cheap P E Ratios Investors May Want To Recheck

Artificial intelligence sits at the crossroads of several powerful themes right now, from energy driven inflation risks and volatile policy paths to companies trying to manage costs and productivity. With central banks watching every inflation signal and earnings under pressure from higher input and financing costs, investors are looking at AI stocks as a way to gain exposure to tools that many businesses are exploring to do more with less. This AI Stocks screener focuses on companies directly tied to the ChatGPT and AI trend, and the article will highlight 3 stocks from that list for closer analysis.

Cerillion (AIM:CER)

Overview: Cerillion is a London based software company that provides telecom operators and subscription businesses with ready made platforms for billing, charging and customer management, covering everything from consumer mobile bundles and smart city services to complex B2B contracts across multiple regions.

Operations: Cerillion generates most of its revenue from Software at £22.6m, followed by Services at £17.8m and Other income of £2.0m.

Market Cap: £310.2m

Cerillion gives you targeted exposure to billing and customer platforms that many telecom operators depend on as they experiment with AI powered analytics and more flexible digital services. It trades on a P/E below some peer and fair value estimates. The company posts high net margins in the low 30s and analysts expect solid growth in both earnings and revenue. However, the latest half year showed revenue and profit falling, which raises questions about how resilient that performance really is. Combined with concentrated non cash earnings and a board with relatively low independence, Cerillion becomes a stock that may merit closer scrutiny rather than a quick verdict.

Cerillion’s strong margins and telecom exposure suggest there is more to consider beneath the surface, yet the recent drop in revenue and profit leaves key questions open, so it is worth scanning the 2 key rewards and 1 important major warning sign

Bytes Technology Group (LSE:BYIT)

Overview: Bytes Technology Group is a UK based IT reseller and services company that helps organisations source and manage software, security, AI and cloud solutions, along with the hardware and training needed to run them effectively across the United Kingdom, Europe and other regions.

Operations: Bytes Technology Group generates its revenue primarily from its IT Solutions Provider segment at £220.6m, with £211.9m from the United Kingdom and the balance from Europe and the rest of the world.

Market Cap: £968.3m

Bytes Technology Group provides exposure to AI, cloud and cybersecurity spending through a business that already works at scale with public and private sector clients. Revenue sits at £220.6m and profits remain healthy, but earnings recently declined and guidance points to flat operating profit as the company absorbs higher technology costs and a cost reset. At the same time, returns on equity are very high, the P/E is below both peer and sector averages, and management is returning cash through dividends and buybacks while refreshing the board. For investors interested in how an IT reseller can balance AI growth ambitions with funding risk, public sector margin pressure and changing Microsoft incentives, there is more to consider.

Bytes Technology Group’s high returns on equity, cash returns and below sector P/E suggest there is more to the story than the headline earnings decline, so it is worth reading the 3 key rewards and 1 important warning sign

AdvancedAdvT (AIM:ADVT)

Overview: AdvancedAdvT provides software platforms that support business operations and healthcare compliance, offering tools such as financial management, AI based healthcare intelligence, human capital management and workforce management solutions across the UK, Europe, North America and other regions.

Operations: AdvancedAdvT generates all of its £53.4m in revenue from Internet Software & Services, with 100% currently coming from the United Kingdom.

Market Cap: £224.4m

AdvancedAdvT sits at the intersection of enterprise software and AI enabled healthcare compliance. This places it within the AI Stocks screener’s focus on real world applications rather than hype. Forecast earnings growth of 32% a year is reported alongside a recent drop in net margin from 25.1% to 8.6% and a large £5.6m one off loss. A very high P/E of 48.6x and low 3% ROE highlight the tension between growth expectations and current profitability. The company also uses higher risk external funding and has a board that is only 40% independent. These factors add governance and balance sheet questions to an otherwise growth heavy story.

AdvancedAdvT’s 32% forecast earnings growth, lofty 48.6x P/E and low 3% ROE suggest something in the story is decoupling, and the analyst forecasts for AdvancedAdvT may reveal what the headline numbers are not showing yet

The three AI stocks covered here are just a starting point, as the full Simply Wall St screener has surfaced 15 more companies linked to semiconductors, cloud, LLMs and other AI tools with equally compelling narratives. If you want to identify and analyze the specific catalysts that matter to you, from exposure to ChatGPT style products to AI infrastructure and cash generation, use the Artificial Intelligence/ AI Stocks screener to filter for the highest conviction ideas.

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Seeking Fresh Alternatives Beyond AI?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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