UK AI Stocks Worth Watching As Business Software Spending Rises

UK business investment is rising, with ICT equipment a key driver, and that puts artificial intelligence squarely in the spotlight. Companies are pouring money into tools that can aim to boost productivity, cut costs and sharpen decision making. Investors who ignore this shift may risk missing an important wave of potential value creation. This article highlights three stocks from our AI Stocks screener that sit at the heart of this trend.

The three stocks covered below are just a starting sample. The full screen surfaced 16 more companies with equally compelling AI narratives that are not covered in this article. To identify and analyze your own highest conviction ideas at the core of the ChatGPT and AI trend, head straight to the Artificial Intelligence/ AI Stocks screener.

Cerillion (AIM:CER)

Cerillion is a London based software company that builds billing, charging and customer management systems for telecom operators and subscription businesses worldwide, from traditional carriers to smart city projects. It earns most of its revenue from Software at about £22.6 million, with a further £17.8 million from Services and £2 million from Other activities. The company currently has a market cap of roughly £266 million.

Cerillion sits at the intersection of telecoms and AI, with products like its Enterprise Product Catalogue and Business Insights platform using AI to help customers design tariffs and analyse data more effectively. The stock trades on a lower P/E than many software peers, despite high returns on equity and analyst expectations for revenue and earnings growth, but the picture is not one sided. Recent half year results showed revenue and profit falling, the board is only partly independent and funding relies heavily on external borrowing. For investors focused on AI infrastructure rather than headline grabbing chatbots, Cerillion is an under the radar way to get exposure to real world telecom and subscription billing projects.

Cerillion’s mix of high returns on equity and a lower P/E than many software peers raises a simple question: Is the market underpricing its AI telecom billing niche, or correctly bracing for the funding and governance risks flagged in the 4 key rewards and 1 important major warning sign

Build your own AI billing and software shortlist

Cerillion and the two other stocks in this article all came from a single Simply Wall St screen, but the real edge is in building filters that match your own style. Use our flexible Screener to combine metrics like valuation, growth, quality and risks into your own watchlist, or start with any of our curated Investing Ideas.

Bytes Technology Group (LSE:BYIT)

Bytes Technology Group is a UK based IT solutions provider that helps organisations buy and manage software, cloud, cybersecurity and AI tools, as well as related hardware and training. It generates all of its £220.6 million in reported revenue from its IT Solutions Provider business, supplying and supporting everything from cloud licences to security services. The company currently carries a market cap of about £945 million.

Investors looking at AI infrastructure rather than headline grabbing consumer apps may find Bytes Technology Group worth a closer look. The company is leaning into AI, cloud and cybersecurity projects while also rolling out new marketplaces and internal platforms that aim to improve efficiency and deepen customer relationships, all supported by a reported 63.2% return on equity. At the same time, earnings growth is only expected to be moderate, margins have come under pressure from lower margin public contracts and the board is going through a period of change. That combination of strong fundamentals, active investment in growth and real execution risk makes Bytes a potential AI screening candidate rather than a straightforward story.

Bytes Technology Group is leaning into AI, cloud and cybersecurity with a reported 63.2% return on equity, yet board shifts and margin pressure leave key questions open. See how those cross currents show up in the 3 key rewards and 1 important warning sign

AdvancedAdvT (AIM:ADVT)

AdvancedAdvT is a London based software group focused on business and healthcare platforms, including AI based compliance tools, workforce management and cloud delivered software. It currently reports all of its £53.4 million in revenue from Internet Software & Services, entirely generated in the United Kingdom, and the stock has a market cap of about £231 million.

AdvancedAdvT gives you exposure to AI heavy healthcare and business software at a time when earnings are forecast to grow 32% a year, even though recent results were hit by a one off £5.6 million loss and net margins fell to 8.6%. One discounted cash flow (DCF) based fair value estimate is above the current share price. However, the stock also carries a high P/E, a modest 3% return on equity and relies fully on external borrowing. The potential upside is therefore closely linked to how management handles funding risk and restores profitability, and the next phase of margin recovery and progress after the August 2026 AGM could be important for this AI focused investment case.

AdvancedAdvT’s earnings story is accelerating on paper, yet a high P/E, modest 3% return on equity and full reliance on borrowing leave crucial questions open that the analyst forecasts for AdvancedAdvT starts to resolve.

Seeking Fresh Alternatives Before Momentum Flies

Fresh AI and infrastructure themes can move from under the radar to fully priced faster than many expect. Scan these curated stock ideas before the crowd and consider them ahead of time.

• Spot cash rich balance sheets before they attract wider attention by running the list of solid balance sheet and fundamentals (20 results) while it still highlights under followed companies with resilient financial foundations.
• Explore potential income opportunities with curated high yield payers by scanning the 6 dividend fortresses before yields change and the strongest opportunities are identified by income focused investors.
• Track early strength in precious metals producers by reviewing the 30 elite gold producer stocks while these ideas remain under the radar and before any shifts in sentiment drive renewed interest.

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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