What are the best UK AI stocks to buy before 2025?

When it comes to the best artificial intelligence (AI) stocks to buy, most of the headlines go to the obvious industry giants such as: Microsoft And Nvidia.

However, the UK has its own set of companies that are thriving and rarely making the headlines. As a result, they trade at far cheaper valuations and offer far greater upside potential. And right now, two AI stocks have caught my eye.

AI-powered digital marketing

Marketing techniques have evolved drastically over the last decade. As data mining becomes more effective, personalized advertising has evolved from a fringe technology to an industry standard. And now leading digital marketing platforms like dotDigital (LSE:DOTD) are using AI to take personalization to the next level.

Beyond the obvious applications of AI to create more compelling marketing copy, dotDigital has developed an AI model with predictive capabilities.

Companies using the CXDP platform can now use AI-powered predictions to determine which customers are most likely to spend money, how much money they will spend, and even when that spending is most likely.

The forecasts go even further by estimating the number of orders someone will place over their lifetime as well as the expected churn rate to predict a customer’s lifetime value.

The end result is that companies can use their marketing budgets far more effectively while improving the customer experience. Of course, dotDigital isn’t the only company innovating its marketing platform with AI. And there is a lot of wealthy competition that needs to be fended off.

However, I remain optimistic as the average revenue per customer has already increased by 30% since the introduction of the AI ​​model. That’s why I’ve already included dotDigital in my portfolio.

A new AI-driven device cycle

In the world of building and maintaining digital infrastructures Softcat‘s (LSE:SCT) was an outstanding artist. Since more and more companies want to automate and digitalize their processes, the IT reseller had little difficulty in winning customers. And its performance was reflected in a share price increase of over 40% in the last two years.

But this dynamic could be just the tip of the iceberg. Management has made significant investments in expanding its talent pool as well as training existing employees to prepare for a new AI spending cycle in 2025.

We’ve already seen the explosive results of AI spending in the US. And now that IT upgrades are coming to the UK, Softcat could soon be coming to use. At least that’s what management’s forecast for double-digit gross profit growth suggests.

With shares trading at a price-to-earnings ratio of 28.7, there’s no denying that Softcat is a pretty expensive investment. However, that premium pales in comparison to companies like Nivida, which are at 64 times earnings. And if management’s forecasts are correct, the valuation appears far more reasonable.

It goes without saying that expectation-driven stock prices involve a high level of risk. Should performance fall short of market forecasts, investors can expect significant volatility on the horizon. And since Softcat isn’t the only company pursuing this opportunity, it could very easily become a reality if the competition proves more effective.

However, Softcat’s impressive track record makes me cautiously optimistic. That’s why I’m carefully considering adding these stocks to my growth portfolio this month.