UK IT resellers gain from AI spending as Bytes, Softcat earn buy ratings

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UK IT resellers benefit from AI

Highlights

AI adoption is boosting demand for UK IT resellers like Bytes Technology and Softcat, as operational tech spending could rise from 10 to 30 per cent.
Bytes receives a buy rating after £19.4 million CyberOne acquisition, with gross invoiced income up 19.6 per cent to August 31 and half its business Microsoft-based.
Softcat, also rated buy, reported hardware gross invoiced income up 41.6 per cent to £1.4 billion and software income up 25 per cent, supported by ongoing AI and security spending.

AI adoption boosts reseller demand

As reported by Financial Times, investors are increasingly focusing on the role of IT resellers as major technology groups seek wider adoption of artificial intelligence products after heavy infrastructure spending. Businesses and public sector organisations are looking for help with integration, licensing, cyber security and identifying practical use cases, creating a supportive backdrop for companies such as Bytes Technology and Softcat.

Broker Peel Hunt says AI could lift long-term technology spending from about 10 per cent of operational expenditure budgets to between 20 and 30 per cent. As organisations weigh the benefits of tools such as agentic AI and cloud migration, resellers are positioned as intermediaries that can simplify implementation for customers and extend the reach of hyperscalers such as Alphabet, Microsoft and Amazon Web Services.

Both Bytes and Softcat serve public and private sector clients. Bytes, for example, helped deploy Microsoft 365 Copilot to 500,000 NHS staff, with the aim of reducing administrative work and freeing up more time for patient care.

Broker calls on Bytes, YouGov and Softcat

Bytes Technology receives a buy recommendation after strengthening its Microsoft-focused security offering through the £19.4 million acquisition of UK cyber security company CyberOne. Around half of its business already comes from Microsoft products, and gross invoiced income rose 19.6 per cent in the six months to August 31; Investec says the deal leaves the company well placed to help clients make better use of their Microsoft estates while supporting growth in services.

YouGov is rated hold after launching a £15 million buyback on the view that its market value does not reflect intrinsic worth. The analytics technology group says trading improved markedly in the second half, and management is guiding for full-year 2027 growth of 7 to 12 per cent, even though adjusted operating profit fell 11 per cent to £54.3 million and the forward rating of 8.9 times is broadly in line with the peer median.

Softcat also earns a buy rating after reporting strong demand across hardware, software and cyber security. In the year to July 31, hardware gross invoiced income rose 41.6 per cent to £1.4 billion as customers increased spending on data centres and networking infrastructure, while software income grew 25 per cent, helped by cyber security licensing; Peel Hunt is supportive of the company’s £785 million acquisition of U.S.-based GDT and expects AI and security spending to keep supporting demand.

In our earlier article on the surge in cybersecurity funding, we noted that Q3 saw a sharp rise in total capital raised as investors wrote larger cheques for fewer late-stage deals, with AI-focused and identity security firms drawing the most attention. We also highlighted how big-ticket M&A and consolidation reinforced the view that AI-related risk management is keeping cybersecurity a priority for both buyers and investors.

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