With artificial intelligence (AI) putting jobs at risk, earning a second income’s more important than ever.
In November, the British Safety Council highlighted a study revealing how AI could cost the UK workforce up to three million jobs by 2050.
However, the rise of AI presents both challenges and opportunities. The study notes how new roles could emerge from the transition. Until then, some workers may find their primary source of income cut off. For those facing potential unemployment, a second source of income could be a lifetime.
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Ironically, investing in AI-focused companies could be a strategic way to work towards that goal. After all, if you can’t beat ‘em, join ‘em, right?
Here are some UK-based companies worth considering as an investment in AI.
Data’s king
British data analytics firm RELX (LSE: REL) was an early adopter of AI. With a vast collection of proprietary databases, it’s the go-to provider of decision tools for business in medicine, risk, legal and scientific fields.
What’s more, it’s established Responsible AI Principles to ensure its related applications are ethical and effective.
Revenue growth’s been steady and consistent since Covid, climbing from £7.1bn in 2020 to £9.16bn in 2023. Results for 2024 are expected to report revenue of £9.5bn and earnings per share (EPS) up from £1.12 to £1.21.
For a data-centric company like RELX, the threat of a cyber attack’s ever-present. Data leaks can be devastating for large businesses tasked with securing private data, often resulting in significant financial and reputational damage. I’m sure the £71.4bn company has excellent cybersecurity but it’s a risk to consider.
Digital transformation
Kainos Group‘s (LSE: KNOS) a FTSE 250 digital technology company. It specialises in IT services and software solutions, with a strong focus on the provision and support of the business software Workday.
It assists organisations in accelerating the shift to a fully digital workplace. In recent years it’s begun to leverage AI and machine learning to solve complex operational challenges. Some of its key services include predictive analytics, natural language processing and real-time business intelligence dashboards.
Worryingly, the stock’s been in decline for several years. In December, the firm announced the surprise reappointment of CEO Brenden Mooney who stood down in 2023. Whether this will help revive its fortunes remains to be seen. There’s a risk the upheaval could extend losses.
Yet analysts remain bullish, with the average 12-month forecast eyeing a 40% price rise. This is reinforced by the company’s commitment to shareholders, with consistent dividend growth from 6p a share to 27.3p over the past eight years.
US exposure
Naturally, the best AI opportunities are often found in the US. That’s where Manchester & London Investment Trust comes along. This UK-listed technology fund provides exposure to top US tech firms like Nvidia, Microsoft and AMD.
Currently, it’s trading at a large discount to net asset value (NAV). While that presents a potential buying opportunity, there’s a risk it doesn’t narrow, resulting in subpar returns. Promisingly, the portfolio only includes 10 stocks, suggesting a careful selection process.
Over the past two years, it has delivered returns of 124.4%. Comparatively, popular tech-focused trust Polar Capital Technology Trust has returned only 91%.
