Global tech demand linked to AI hardware and software is now a key swing factor for trade and earnings, as seen in export data from hubs such as Singapore. That shift puts artificial intelligence stocks at the center of many growth conversations. This article walks through three stocks from an AI screener that targets companies directly tied to chips, cloud, large language models (LLMs) and ChatGPT style tools.
The stocks covered below are just a starting sample from this AI investing idea, and the full screen surfaced 15 more companies with equally compelling narratives that are not discussed in the article. To go straight to the source, use the Artificial Intelligence/ AI Stocks screener to identify, filter and analyze the AI stocks that best fit your own conviction and risk profile.
Cerillion (AIM:CER)
Overview: Cerillion is a London based telecom software company that supplies billing, charging and customer management platforms to communication service providers worldwide, with products that cover everything from subscription billing and smart city networks to digital customer experience tools and AI powered analytics.
Operations: Cerillion generates most of its revenue from Software at about £22.6 million, followed by Services at about £17.8 million and around £2 million from Other activities.
Market Cap: £266 million
Cerillion gives you exposure to AI tools that sit at the heart of telecom billing and network automation, including an AI product catalogue and analytics platform. The stock trades on a P/E below both direct peers and the wider European software group. Analysts currently forecast double digit revenue and earnings growth and indicate potential upside to the current share price, following a period in which the stock underperformed UK software peers and reported a decline in recent half year profits. The company combines high margins, strong returns on equity and a rising interim dividend with identifiable AI use cases, while investors also need to consider issues such as the funding structure and the impact of non cash earnings.
Cerillion’s combination of AI billing, high margins and a lower P/E than its peers raises a simple question: is the market mispricing this story or seeing something you are not? The 4 key rewards and 1 important major warning sign
Build your own AI billing and analytics shortlist
Cerillion and the two other stocks in this list all came from a single AI focused screener, but the real value is in shaping your own filters. Use our flexible Screener to mix criteria like valuation, growth, balance sheet strength and risks into a custom watchlist, or start with any of our curated Investing Ideas.
Bytes Technology Group (LSE:BYIT)
Overview: Bytes Technology Group is a UK based IT solutions provider that supplies software, security, AI and cloud services, alongside hardware such as servers and laptops, to organisations in the United Kingdom, wider Europe and internationally, backed by consulting, training and software asset management support.
Operations: Bytes Technology Group generates essentially all of its £220.6 million in revenue from its IT Solutions Provider segment, with most sales coming from the United Kingdom and smaller contributions from Europe and the rest of the world.
Market Cap: £962.2 million
Investors looking at AI infrastructure may pay attention to Bytes Technology Group because it sits at the junction of software, security and cloud projects that enterprises are actively funding. The company is focusing on AI centric Microsoft offerings and cybersecurity, areas that carry higher margins, while also investing in new systems, a marketplace portal and additional technical staff intended to support future scaling. At the same time, there are real trade offs to weigh, including pressure from lower margin public sector work, dependence on vendor rebate schemes and a funding structure built entirely on external borrowing. Analysts are not aligned in their views and UBS recently moved to a Sell rating, which leaves room for you to consider whether these concerns outweigh the return on equity and cash flow profile implied by current forecasts.
Bytes Technology Group sits at the crossroads of AI, cloud and security projects, yet UBS skepticism and funding questions may be masking the full picture. The 3 key rewards and 1 important warning sign
AdvancedAdvT (AIM:ADVT)
Overview: AdvancedAdvT is a London based software group that provides compliance, workforce management and financial management platforms, including AI based healthcare compliance tools and cloud workforce management SaaS products, to customers across the UK, Europe and North America.
Operations: AdvancedAdvT generates all of its £53.4 million in revenue from Internet Software & Services in the United Kingdom.
Market Cap: £231 million
AdvancedAdvT sits squarely in the AI conversation because it already sells AI based healthcare compliance and process automation tools. However, the stock pairs this with mixed fundamentals that require closer inspection. Earnings are forecast to grow 32% a year while revenue growth is a steadier 5%, and the company recently reported a fall in net income to £4.6 million despite higher revenue of £53.4 million, partly influenced by a £5.6 million one off loss and slimmer profit margins. Add in a high P/E, low 3% return on equity and a balance sheet funded entirely by borrowings, and this provides software and AI exposure that may appeal to investors who are comfortable weighing valuation against execution and funding risk.
AdvancedAdvT’s high P/E, modest 3% return on equity and borrowed balance sheet sit alongside AI healthcare tools that could reshape its profile. Get the full story in the 2 key rewards and 2 important warning signs
Seeking Alternatives Before Momentum Flies
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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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