March 18 (Reuters) - British IT firm Softcat raised its annual profit expectations for fiscal 2026 on Wednesday after strong artificial intelligence infrastructure demand and early orders from
UK's Softcat lifts profit forecast, but flags memory chip shortage uncertainty
Softcat's Financial Performance and Market Outlook
By Raechel Thankam Job
March 18 (Reuters) - British IT firm Softcat raised its annual profit forecast on Wednesday after strong demand for artificial intelligence infrastructure and early orders driven by memory chip shortages boosted first-half results.
Shares in the IT services and infrastructure provider jumped nearly 10% in early trading.
Impact of Memory Chip Shortages
However, it warned that chip supply constraints created uncertainty for the second half.
AI Adoption and Corporate Spending Trends
Softcat has been benefiting from rising corporate spending on AI and automation, helping it maintain growth beyond recurring and one-off projects even as concerns over AI disruption triggered a selloff in software stocks in February.
AI adoption has also fuelled demand for memory chips that continues to outstrip supply, creating a shortage some expect to last until 2030.
CEO's Perspective on Long-Term Opportunities
"The market is still only in the early stages of the AI adoption cycle, creating significant long-term opportunities for Softcat," CEO Graham Charlton said.
Profit Forecast and Financial Results
The company now expects high-single-digit growth in underlying operating profit for the year to July, up from a previous forecast of low-single-digit growth, though it cautioned that second-half comparisons will be tougher due to larger projects delivered in the same period last year.
Analyst Reactions and Market Commentary
STRONG SET OF RESULTS
JPMorgan analysts described the update as a "strong set of underlying results" but warned against assuming similar outperformance next year, noting that part of the improved outlook reflects potentially one-time items.
First-Half Profit and Strategic Investments
For the first half, Softcat reported an underlying operating profit of 93.8 million pounds ($125.4 million), up 27.3% from a year earlier.
The company has also been investing in data and digital projects, including acquisitions to expand its automation and AI infrastructure footprint.
($1 = 0.7481 pounds)
(Reporting by Raechel Thankam Job in Bengaluru. Editing by Mrigank Dhaniwala and Mark Potter)
