By Ken Wotton, fund manager of the WS Gresham House UK Smaller Companies Fund
The recent rise of artificial intelligence (AI) has had a profound impact on markets, as investors seek to determine the companies best placed to harness the potential of this transformative technological change.
While much of the investor attention has focused on the US enablers of AI, such as chip behemoth Nvidia, the UK also has entities at the cutting edge of this innovation, as exemplified by the likes of Google’s DeepMind and Graphcore.
However, investor eyes have also been focused on companies perceived to be negatively impacted by the AI phenomenon, including a number of high-quality UK businesses. Despite ongoing pessimism, we are convinced numerous British companies – especially within the agile small and mid-sized space – can coexist and eventually thrive as the utilisation of AI accelerates.
Investors will play a crucial role in this phase, guiding corporate boards to deeply understand AI’s capabilities and integrate this innovation to gain competitive advantages and boost productivity. Below, we spotlight three small-cap companies set to capitalise as the AI rise progresses.
Training AI
RWS Group offers specialised services in translation, localisation, content management, and intellectual property. By combining the expertise of linguistic professionals with advanced AI algorithms, RWS is able to craft increasingly efficient and accurate translation tools.
As high-quality data is vital to enhancing AI’s effectiveness, RWS’ TrainAI system taps into a global network of over 100,000 annotators and linguists – enriching AI with data across more than 400 language variants. The service extends to complex projects, such as gathering selfie videos to refine facial recognition systems or creating multilingual datasets for virtual assistants.
In an environment where AI teams are constantly being challenged to acquire large volumes of data to train AI, this initiative is instrumental in feeding systems with high-quality, relevant data. By blending human expertise with AI, TrainAI enables data specialists collect and process the right data – text, audio, image and video – to train AI models. This approach underscores the principle that AI technologies are only as useful as the data provided to them.
Expanding capabilities
As 90% of goods are transported by sea, global trade is reliant on efficient nautical operations. By leveraging AI and machine learning, Windward provides critical insights into maritime navigation and logistics. The company tracks 2.2 million vessel activities daily and helps its customers optimise supply chain operations and manage its transport risks.
Windward has expansive AI capabilities including applications in regulation, logistics, decarbonisation, law enforcement and navigation safety. For instance, the company partnered with Danske Bank to help it navigate the complex compliance requirements by providing insights on financial trade regulations and sanctions. Most recently, the company has joined forces with Interpol to tackle global maritime crime. Windward provides intelligence and insights to help Interpol detect, track and prevent illicit activities, such as trafficking and human smuggling.
Its gradual expansion reflects Windward’s strategic approach to growth, balancing swift technological adoption with careful, long-term planning. Unlike companies that rush to adopt new technologies at all costs – which can often lead to more significant risks – Windward’s methodical strategy has allowed it to integrate new technologies thoughtfully and effectively.
Human-in-the-loop
Netcall, a customer engagement software and business process automation company, effectively uses AI within areas including healthcare, local government, and financial services. Patient Hub, one of the company’s notable applications, is a digital service enabling NHS patients to confirm or rearrange appointments.
The system reduces missed appointments by monitoring appointment data in real-time. This enhances the patient experience by reducing waiting lists and allows healthcare staff to reallocate time to more critical tasks, increasing overall productivity.
However, deploying AI in high-risk environments like NHS trusts or social care requires caution. While AI can personalise content on a large scale with minimal risk, in sensitive areas, it must complement rather than replace human judgment. Netcall ensures safety and effectiveness by advocating for a balanced integration of AI, which includes human oversight. This strategy optimises operations and safeguards against potential pitfalls in data protection and privacy.
AI is enabling significantly powerful tools with the potential to be both disruptive and transformative, but they do not stand alone. These tools have the potential to leave businesses that are on the back foot trailing, while enhancing those that are on the front foot to drive productivity, scalability, efficiency and customer experience gains. The key will be to align these tools with the existing domain knowledge, trusted customer relationships and routes to market to unlock this potential.
It is clear that AI is relevant to businesses of all sizes and sectors. Management teams need to be bold in embracing AI in a way that best suits their business: those that do not will ultimately be left behind.
