How to find UK AI shares to consider buying

There’s more than one way for investors to get exposure to AI through owning UK shares. Our writer outlines some possible strategies to consider.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: NVIDIA

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With the buzz surrounding Nvidia and Meta it can sometimes seem that artificial intelligence (AI) stocks are an American thing. But there are quite a few UK shares that offer investors exposure to AI in one way or another.

Here, I outline a couple of possible approaches an investor could adopt when hunting for shares.

Buying into the US indirectly

One approach would be to buy shares in UK investment trusts that hold stakes in US giants. As an example, Scottish Mortgage Investment Trust holds Nvidia shares.

Should you invest £1,000 in Computacenter Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Computacenter Plc made the list?

See the 6 stocks

In fact, the chipmaker was the trust’s fifth biggest holding at the end of last month, accounting for around 4% of its overall valuation. It also owns a sizeable stake in rival chipmaker ASML.

Scottish Mortgage’s tech focus means its holdings are not just limited to chip manufacturers. For example, it also has a stake in Tempus AI. That firm uses AI to help healthcare professionals diagnose and treat diseases including cancer.

I am a bit burnt on that score having had high hopes for a similar investment in a different firm that has turned out to be one of my worst investments in recent years.

If I had invested in Scottish Mortgage instead of buying individual UK shares that I felt had a good AI investment case, I could have benefitted from the trust’s expert managers and also a level of diversification it is hard for me to achieve as a private investor on a small budget.

FTSE 100 member Scottish Mortgage is only one of a number of London-listed investment trusts that own US AI shares. In the FTSE 250, for example, Polar Capital Technology Trust ended last year with Nvidia as its biggest holding.

Looking for individual UK shares

What about individual UK shares not investment trusts? Some may be AI-focused but there are others where the technology potentially offers cost savings as part of an existing business model, from pharma giants like AstraZeneca to digital information providers such as RELX.

The ins and outs of AI feel a bit beyond my own circle of competence as an investor. But I need not rule out any AI-related shares.

Take Computacenter (LSE: CCC) as an example. It provides IT equipment and services to a wide range of commercial clients across multiple markets. That sounds like a business set to benefit from AI spending, in my view.

In a trading update Tuesday (28 January), the company did not focus on AI, but did say: “Order intake during the second half, notably in North America, has been strong”. As it noted at the interim results point last September, “we are increasingly seeing a need for comprehensive advice on the use of AI in general and AI-related infrastructure”.

Created with Highcharts 11.4.3Computacenter Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Computacenter faces some risks too. Yesterday’s statement revealed that sales revenues fell last year once exchange rate movements are taken into account. It also highlighted the risks to this year’s performance posed by “uncertain macroeconomic and political environments in some of the European countries in which we operate”.

Still, with a proven business model, large customer base and deep industry knowledge, I think the investment case has a lot of strengths. The price-to-earnings ratio of 15 looks reasonable. I think UK investors on the hunt for AI shares ought to consider Computacenter.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca Plc, Computacenter Plc, Meta Platforms, Nvidia, and RELX. 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.

More on Investing Articles

Investing Articles

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »