2 UK stocks I think could seriously outperform with AI adoption

Artificial intelligence. (AI) innovation and adoption continue to gain momentum. Across various sectors, companies are seeking to integrate it into their everyday activities to streamline operations and increase efficiency.

When I examine different UK stocks, the ones that could benefit the most are likely to see share price gains. Here are two I’ve spotted.

A fresh stimulus

First up is Ocado (LSE:OCDO). I’ve not been the biggest fan of the company, as continued losses have pushed the share price lower and lower. Over the past year, the growth stock is down 37%. But my opinion’s starting to change.

Even with the share price performance, consider why the future could be much brighter. Ocado’s pushing for growth outside of just the grocery division. The firm’s robotic arms and reinforcement-learning systems are explicitly designed to cut labour costs, thanks to the AI models. The whole concept around customer fulfilment centres (CFCs) is that the use of technology can help third parties be more efficient and therefore more profitable by using Ocado’s systems.

Looking forward, if AI continues to develop and Ocado can integrate this even deeper into its offer, I think it could help to make the company profitable. The firm’s already leveraged AI to boost productivity (and reduce headcount in certain tech/finance roles) as part of a cash-improvement initiative. This could result in higher revenue with lower costs.

There are a lot of ‘coulds’ in there, of course and Ocado so far has been a big disappointment. In terms of risks, the company has faced slow progress in launching new sites and converting the pipeline to live CFCs. If more cases of missed or delayed rollouts happen, investors could lose patience.

Already pushing ahead

Another stock is Sage Group (LSE:SGE). The UK software provider’s already been utilising AI in its products for clients. One reason the share price is up 19% over the last year is due to this.

When I look ahead, I think the stock could continue to do well. Sage is embedding AI agents (such as Copilot) into core workflows. The businesses that pay for this software will benefit from automation, including streamlined bookkeeping and enhanced compliance. Therefore, it should help Sage by having sticky clients and enabling them to justify higher subscription pricing.

I believe that most of the SME market Sage targets haven’t yet caught up to speed on the AI features on offer. This underpenetrated SME market (I’m talking millions of businesses in target markets) represents a huge opportunity for the coming years. If it can tap into even a small portion of this market, the revenue uplift could be huge.

One concern is increasing competition. Many FinTech or accounting platforms are embedding AI, so price competition could become a factor going forward.

On balance, I think both UK stocks could do very well if AI integration and adoption continues at pace. Therefore, I think they’re worth considering by investors.

The post 2 UK stocks I think could seriously outperform with AI adoption appeared first on The Motley Fool UK.

More reading

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• Trading close to an 8-year low, does Ocado’s share price look an unmissable bargain to me now?
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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