What are the best under-the-radar UK AI shares for me to buy before 2025?

When talking about the best artificial intelligence (AI) shares to buy, most headlines go to the obvious industry titans such as Microsoft and Nvidia.

However, the UK has its own collection of companies that are poised to thrive and rarely make the headlines. As a result, they trade at far cheaper valuations, offering far greater upside potential. And right now, two AI shares have caught my eye.

AI-powered digital marketing

Marketing techniques have evolved drastically over the last decade. With data mining becoming far more effective, personalised advertising’s gone from a fringe technology to an industry standard. And now, leading digital marketing platforms like dotDigital (LSE:DOTD) are leveraging AI to take personalisation to the next level.

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

Businesses leveraging its CXDP platform can now use AI-powered projections to identify which customers are most likely to spend, how much money they’ll spend, and even when this spending’s most likely to occur.

The forecasts go even further to approximate how many orders someone will place over their lifetime, along with the expected churn rate to predict a customer’s lifetime value.

The end result is companies can far more effectively allocate marketing budgets while simultaneously improving customer experiences. Of course, dotDigital isn’t the only business innovating its marketing platform with AI. And there’s a lot of deep-pocketed competition to fend off.

Nevertheless, given that the average revenue per customer has already increased by 30% since the AI model launched, I remain optimistic. That’s why I’ve already added dotDigital to my portfolio.

A new AI-driven device cycle

In the world of building and maintaining digital infrastructure, Softcat’s (LSE:SCT) been a stellar performer. As more businesses seek to automate and digitalise operations, the IT reseller has had little trouble attracting customers. And its performance has been reflected in its share price growing by over 40% in the last two years.

Yet, this momentum could be just the tip of the iceberg. Management’s been making some aggressive investments into expanding its talent pool as well as training existing employees in preparation 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 making their way to the UK, Softcat could soon be sent flying. At least that’s what management’s double-digit gross profit growth forecast would suggest.

With the shares trading at a price-to-earnings ratio of 28.7, there’s no denying that Softcat’s quite an expensive-looking investment. Yet, this premium pales in comparison to the likes of Nivida, which stands at 64 times the earnings. And if management’s projections are accurate, then the valuation starts to look far more reasonable.

Needless to say, expectation-driven stock prices carry a lot of risk. Should performance fall short of market forecasts, then investors can expect a significant amount of volatility on the horizon. And given that Softcat isn’t the only business chasing this opportunity, if competitors prove more effective, this could very easily become a reality.

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

This post was originally published on Motley Fool

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