Artificial intelligence (AI) looks set to have a massive impact on the world in the years ahead. Some people think it could be bigger than the internet.
Now a lot of AI stocks are listed in the US. However, there are UK-listed businesses that offer exposure to the technology. With that in mind, here are two FTSE 100 companies that are leveraging the power of AI today.
AI-powered services
Cloud-based accounting software company Sage (LSE: SGE) is one company keen to use the technology to its advantage.
In its recent H1 results, it said it is committed to delivering innovative, AI-powered services that make organisations more productive and resilient. It also said it was making great progress embedding AI-powered features across its flagship product, Sage Business Cloud. In total, AI was mentioned around 10 times in the results report.
It didn’t stop there though. In an interview after the results, CEO Steve Hare said he was excited about the technology’s potential: “This next generation of generative AI is very exciting in terms of the ability for us to deliver more productivity to our customers and also benefit from it ourselves within Sage.”
Now, like a lot of software companies, Sage has a relatively high valuation. Currently, it has a forward-looking price-to-earnings (P/E) ratio of about 25. This adds risk.
But I’m bullish on the stock. It’s in a strong uptrend right now. And with analysts increasing their earnings forecasts after the company just raised its full-year guidance, I reckon it can go higher.
A competitive advantage
Another company looking to leverage the power of AI is WPP (LSE: WPP), the world’s largest advertising agency.
Last month, it announced a partnership with chip designer Nvidia to build a generative AI-enabled content engine for digital advertising.
This is an exciting development. That’s because it will enable WPP’s clients to reach consumers in highly personalised and immersive ways at a fraction of the cost of traditional advertising strategies.
For example, let’s say WPP was to create footage of a car driving through London. With the new AI-powered content engine, the same car could instantly be placed on a street in New York or Sydney, without the need for costly on-location production.
“Our partnership with NVIDIA gives WPP a unique competitive advantage through an AI solution that is available to clients nowhere else in the market today. This new technology will transform the way that brands create content for commercial use, and cements WPP’s position as the industry leader in the creative application of AI for the world’s top brands,” said WPP’s CEO Mark Read.
WPP has faced its fair share of challenges in recent years. For example, it had to deal with a massive shift in the way companies advertise. Additionally, it has also had to deal with lower levels of advertising spending amid the weak economy. These challenges could persist.
However, given that the forward-looking P/E ratio here is just 8.5, I think the stock could be worth a closer look right now.
