As the artificial intelligence (AI) revolution sweeps through the tech and digital media sectors, some companies are embracing its potential more effectively than others, according to a recent report by Shore Capital.
The investment firm has zeroed in on companies where AI is more than just a buzzword and can “accelerate an already positive investment case,” said the report released on Friday, which singled out a number of stocks where Shore Capital has a ‘buy’ recommendation in place.
Amongst the media sector mentions were publisher Pearson and communications agencies WPP and Next 15 Group.
Pearson chief executive Omar Abbosh recently said “significant demographic shifts” and “rapid advances in AI” would be key drivers of growth in education over the coming years.
The educational publisher has integrated AI across its products amid a pivot to become a technology-driven company.
“Specifically, Pearson has identified scope to improve customer service, content generation, product design processes and data tools,” said Shore Capital analysts.
Public relations agency Next 15 Group has been an “AI evangelist” for some time, they added, citing its potential to add value to clients and remove internal efficiencies.
Global communications giant WPP has seen wide-scale adoption of its proprietary WPP Open AI platform and strategic partnerships with AI powerhouses such as Bria, Google, and OpenAI. WPP’s latest innovation, Performance Brain, unveiled at Google Cloud Next, aims to predict the best-performing content before campaigns even launch.
Beyond media, Shore Capital also highlighted the sustained AI investments by Rightmove and Moneysupermarket.com owner Mony Group. Both firms have been leveraging AI to fine-tune user experiences and build customer loyalty, areas where analysts see “potential upside”.
In the software and IT services sector, Tpximpact is focusing on ensuring AI systems operate ethically and safely, particularly for its public sector clients.
Meanwhile, SysGroup, fresh off a move to Manchester, has teamed up with IT infrastructure provider Softcat to expand its machine learning footprint, catering to the growing demand for AI tools.
Softcat, also tagged as a ‘buy’ by Shore Capital, is scaling up its workforce to make the most of highly encouraging growth in the UK IT market and the rising demand for AI.
Other software companies earning Shore Capital’s ‘buy’ rating include Sage Group, Eagle Eye, Ebiquity, and RWS Holdings.
Analysts referenced a recent policy paper by Sir Tony Blair, which suggested that AI could save the government £200bn over five years, potentially a boon for digital transformation specialists like Tpximpact, Made Tech, and Kainos.
Made Tech’s shares surged over 35 per cent in April after the company secured a government contract nearing £20m.
London-listed NHS software provider Kainos has reported increases in revenue and pre-tax profit in the full year 2024 even as bookings fell slightly, and it looks set to benefit from increased NHS spending, with more than 30 percent of its projects already integrating AI.
But it comes amid growing scepticism over the AI gold rush. The phenomenon of ‘AI washing’ – where companies inflate their AI credentials to create a halo effect and boost their stock price – is on the rise.
The US Federal Trade Commission issued a cautionary note in February last year about the proliferation of dubious AI claims, and recent research from Bowmore Financial Planning reveals a 75 per cent uptick in UK companies touting AI in their shareholder communications, jumping from 320 to 560 over the past year.