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Artificial intelligence (AI) is going to disrupt a lot of businesses in the years ahead. From tech companies like Google to travel booking companies like Flight Centre, a lot of business models are at risk. The good news is that there are many companies in the FTSE 100 index that look relatively insulated from AI disruption. Here’s a look at two.
This company could prosper in the AI revolution
Ashtead (LSE: AHT) rents construction equipment (eg bulldozers, excavators, generators, etc) in the US, Canada, and the UK. So AI isn’t going to make this company obsolete any time soon.
If anything, the AI boom could help drive growth for the company. Because in the years ahead, there’s going to be a lot of data centres and semiconductor plants built for AI, especially in the US – Ashtead’s largest market.
Given Ashtead’s offer, it could actually end up being a ‘picks-and-shovels’ play on the AI boom. In the same way that those selling picks and shovels during the gold rush made a killing, this company could prosper from the AI build out.
It’s worth noting that, despite the attractive long-term fundamentals, this is a cyclical company. In other words, it’s vulnerable to economic turbulence (this can lead to less construction activity).
Taking a five-to-10 year view however, I reckon this Footsie stock will do well. Trading on a forward-looking price-to-earnings (P/E) ratio of 17, I think it’s worth considering today (I hold some shares in my own portfolio).
A timeless business that’s not going away
Another FTSE 100 company that looks resistant to AI to me is Rentokil Initial (LSE: RTO), the largest pest control business in the world.
No matter what happens in the world in the years ahead as a result of AI, I suspect mice, rats, cockroaches, termites, flies, and wasps will continue to pester society. As a result, Rentokil Initial’s services should remain in demand.
Of course, there’s a risk that generative AI apps like ChatGPT and Gemini – which can be an amazing source of information – could help people learn how to eliminate some pests themselves. I think the majority of people will continue to turn to experts.
It’s worth pointing out that Rentokil also offers cleaning services such as washroom hygiene and specialist disinfection services. These strike me as relatively resistant to AI as well.
This stock – previously a high flyer – has experienced quite a significant pullback recently and I think it looks quite attractive today. Currently, it trades on a forward-looking P/E ratio of 16 and offers a dividend yield of nearly 3%.
I believe there’s potential for solid total returns (share price gains plus dividends) in the years ahead at current levels. In my view, this Footsie stock’s worth considering today.
