Computacenter expects to double its half-year profits – how has this UK firm cashed in on
Computacenter shares have soared to reach an all-time high after the business said it expected to double its half-year profits from a year ago, as it capitalises on the AI boom.
The technology and services provider said its preliminary results indicated adjusted profit before tax for the six months to 30 June would be about double last year’s £81.5million.
Trading in the second quarter exceeded the firm’s expectations following what it described as an ‘excellent’ first quarter.
Shares jumped over 11 per cent to 4,606p, having gained around 100 per cent in the past year.
Computacenter joined the FTSE 100 last month, becoming a significant technology stock in the otherwise fusty index. Analysts say it has capitalised on the build-out needed for data centres that power artificial intelligence chatbots, such as ChatGPT.
As investors look to increase their exposure to the technology, Computacenter’s market cap has surged.
In April, Computacenter said it expected to beat its annual profit forecasts as customers brought forward hardware orders amid data centre and AI-related supply shortages.
Upbeat: Computacenter shares jumped 11 per cent and reached an all-time high on Thursday
Today, it said its UK business had delivered strong growth related to AI-related projects, alongside solid expansion into professional services.
The firm also pointed to further growth in North America as demand from ‘hyperscale customers’ was stronger than expected, supporting both its technology sourcing and professional services units.
These so-called AI hyper scalers are locked in a race to develop further tools and boost their market share.
Computacenter said its committed product order backlog at the end of June was ‘well ahead’ of the £7.1billion reported at the end of last year, reflecting strong order intake during the first half.
The firm expects its annual results to come in comfortably ahead of market expectations, even though trading faces a more challenging comparison in the second half.
Analyst consensus compiled by the company currently forecasts adjusted profit before tax of £313.7million for the full year, with estimates ranging from £305million to £324.3million.
Richard Hunter, head of markets at Interactive Investor, told This is Money: ‘The group has pleasantly shocked investors with a profit upgrade which is largely driven by its exposure to hyper scalers in North America, with the volume growth and relation to AI requirements playing into the group’s hands as Technology Sourcing and Professional Services were in strong demand.
‘Computacenter now expects adjusted pre-tax profit for the first half to be double that of the corresponding period and such is the confidence that in terms of outlook, the group is also guiding that full-year results should be comfortably ahead of expectations.’
He added: ‘The 11 per cent bump in the share price brings the spike to 57 per cent so far this year and to 100 per cent over the last 12 months, prompting its promotion to the FTSE 100 in June.’
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