During the first week of February 2026, a clutch of tech-focused UK shares saw their share prices collapse by double-digits, with some now sitting in near-value stock territory.
Kainos Group (LSE:KNOS) is one such enterprise whose market cap had already been on a downward trajectory since early December 2025. And now, on a forward basis, the group’s price-to-earnings ratio sits at a decade low of just 14.8!
So, is this growth-turned-value stock now a screaming buy for long-term investors? Or is there trouble brewing?
AI disruption risk
For most of its history, Kainos has been a digitalisation specialist, helping businesses and governments implement software solutions to automate processes and boost operational efficiency.
But, in more recent years, management has been evolving the company into a software-as-a-service enterprise by creating bespoke plugins for the Workday human capital management (HCM) platform. And while its suite of tools is still quite niche, they’re proving to be rather popular, delivering impressive and expansive recurring revenue growth.
As of November 2025, its software segment is now responsible for 20% of the top line. But over the medium-to-long term, that could increase significantly, especially as the firm aims to reach £200m in annual recurring revenue by 2030, up from £77.5m today.
However, right now, that means the business remains largely dependent on supporting customer digital transformation projects. And that’s something that could be exposed to significant AI disruption. After all, why would a company hire large teams of consultants to write code and configure systems when AI agents can do most of the legwork?
This fear of disruption is what sparked a wider tech sell-off recently, and unsurprisingly, Kainos got caught in the crossfire.
A buying opportunity?
Buying Kainos shares today is very much a bet on whether the company is an AI enabler or an AI victim. There’s no denying that the firm’s currently core consulting-style revenues are at risk. But with its existing contracts spanning multiple years, the group appears to have more than enough time to adapt and reallocate resources to more aggressively expand its software arm.
This obviously introduces some critical execution risk. And it’s worth highlighting that by building tools for the Workday platform, the business is also tied to Workday’s long-term trajectory and its fight against competing HCM platforms from Oracle and SAP.
Nevertheless, with Kainos shares now trading at a dirt-cheap valuation not seen in over a decade, I can’t help but wonder if the market is seriously underestimating this business. And with a pretty impressive track record of navigating through both favourable and adverse operating environments, this does indeed look like a potential buying opportunity worth investigating further.
Yet it’s not the only business to have been hit during this recent tech sell-off that’s caught my attention this month.
