AI Stocks to Watch in UK Software and Cloud

AI is no longer just a headline; it sits at the center of decisions on inflation, rates, energy security and global growth that are moving markets today. While central banks weigh rate paths and oil prices feed into inflation expectations, investors are looking for companies directly tied to the AI build out in semiconductors, software, large language models, cloud and digital transformation. This AI Stocks screener filters that universe to companies most closely linked to the ChatGPT and AI trend. Below, you will find 3 stocks from this screener that may merit closer attention.

Cerillion (AIM:CER)

Overview: Cerillion is a London based software company that supplies billing, charging and customer relationship management systems to telecom operators and subscription businesses worldwide, helping them manage complex tariffs, services and customer interactions across mobile, broadband, TV and smart city networks.

Operations: Cerillion generates about £22.6 million from Software, £17.8 million from Services and £2.0 million from Other activities.

Market Cap: £309.4 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 operators design offers and extract more value from their data. Recent Agentic AI launches for network orchestration and automation show how it is plugged into the AI build out. The company reports high profitability, with a 32.2% net margin and 22.6% ROE. Analysts expect both earnings and revenue to grow faster than the wider UK market, although recent H1 results showed revenue and earnings pressure that investors should not ignore. Combined with a slightly expensive P/E, reliance on external borrowings and questions around board independence, this creates a richer and more nuanced AI software story than the headline figures suggest.

Cerillion’s high margins and AI exposure look appealing, but the full picture of growth expectations, valuation and recent pressure on results is more complex. Get the 2 key rewards and 1 important major warning sign that could reshape how you see the stock

Bytes Technology Group (LSE:BYIT)

Overview: Bytes Technology Group is a UK based IT reseller and services company that helps organisations source software, cloud, AI and security tools, alongside hardware like servers and laptops, and supports them with training, consulting and software asset management.

Operations: Bytes Technology Group generates £220.6 million from its IT Solutions Provider segment, with £211.9 million coming from the United Kingdom, £5.0 million from Europe and £3.7 million from the rest of the world.

Market Cap: £974.0 million

Bytes Technology Group gives investors exposure to the AI and cloud spending cycle through a business that already has strong customer relationships, very high current ROE and healthy net margins, even as profit dipped recently. The focus on higher value cybersecurity and AI powered software, a growing cloud base and new digital platforms could support revenue growth, while the share buyback and dividends indicate a willingness to return cash to shareholders. However, flat 2027 profit guidance, cost resets, reliance on lower margin public contracts and changing Microsoft rebate structures all introduce execution risk. The balance between these strengths and pressures may make this stock a candidate for closer research by AI focused investors.

Bytes Technology Group sits where high margin AI and cloud demand meets flat profit guidance and changing rebates, and the real story sits inside the 3 key rewards and 1 important warning sign

AdvancedAdvT (AIM:ADVT)

Overview: AdvancedAdvT is a London based software company that provides business management, healthcare compliance and human capital management solutions, along with financial and workforce management tools. These are underpinned by a machine learning AI driven process automation platform used across the UK, Europe, North America and other regions.

Operations: AdvancedAdvT generates about £53.4 million in revenue from Internet Software & Services, all currently reported from the United Kingdom.

Market Cap: £217.8 million

AdvancedAdvT gives you direct exposure to AI enabled automation in real world areas like healthcare compliance, workforce management and financial software. The company currently trades on a high P/E, has a low 3% ROE, has reported a sharp fall in net income to £4.61 million after a one off £5.6 million loss, and is fully funded through higher risk external borrowing. These factors may raise questions about how much of the anticipated growth is already reflected in the price and how resilient it is. The interaction between the company’s growth profile, funding structure and frequent one off items forms the core of the investment narrative around AdvancedAdvT.

AdvancedAdvT’s high P/E and low 3% ROE suggest something is out of sync, and the real tension lies in the balance between AI ambition and funding risks that the analysis report for AdvancedAdvT begins to explore.

The three AI exposed stocks in this article are only a starting point. The full Artificial Intelligence/ AI Stocks screener surfaced 15 more companies with equally compelling AI narratives around chips, software, large language models, cloud and digital transformation. Use Simply Wall St to identify and analyze the specific catalysts and AI stories that matter to you so you can focus on the highest conviction opportunities.

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Seeking Alternatives Before Momentum Flies

Fresh stock ideas do not stay under the radar for long. Before momentum builds and prices start flying, review these focused shortlists while the information still matters and consider them while they are timely.

• Hunt for resilient compounders by scanning a curated 7 resilient stocks with low risk scores that aims to keep portfolio drawdowns in check while others are caught chasing volatility.
• Target future income streams with a focused 4 dividend fortresses built around companies that currently pair strong yields with balance sheets designed to sustain payouts before the crowd notices.
• Position ahead of secular infrastructure trends through a hand picked 36 power grid technology and infrastructure stocks capturing businesses tied to grid upgrades and electrification while these opportunities are still priced for curiosity, not euphoria.

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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