Softcat upgrades profit guidance as AI demand and chip shortages drive growth

British IT infrastructure firm Softcat has raised its annual profit forecast, citing robust corporate demand for artificial intelligence technology and supply chain pressures affecting memory chips. The Marlow-based company announced on Friday that it now expects mid-teens growth in annual adjusted operating profit, a significant upgrade from its previous guidance of high single-digit growth.

The revision follows double-digit year-on-year growth in both gross profit and adjusted operating profit during the third quarter. Management attributed the strong performance to customers accelerating orders to secure inventory, particularly as they seek to avoid potential shortages in global memory chip supplies.

Technology infrastructure providers have seen heightened demand as businesses increasingly integrate AI into their operations. Softcat noted that this shift has contributed to an exponential growth in demand for AI-related products, positioning firms that supply the necessary hardware and services to benefit from the sector's expansion.

Supply constraints remain a key factor in the current market dynamic. Memory chipmakers are struggling to meet global requirements as competition intensifies among tech service providers and product developers. This imbalance has led to customers placing orders in advance to sidestep anticipated supply bottlenecks, further driving revenue for infrastructure firms like Softcat.

Despite the positive outlook, the company acknowledged ongoing uncertainties. Softcat stated it remains aware of the risks posed by the persistent memory chip shortages and the broader macroeconomic environment, which could impact future performance. The firm’s updated guidance reflects a strong operational quarter but underscores the volatile nature of the current supply landscape.