Stifel is entering 2026 with a more constructive stance on UK technology, citing a combination of easing macro headwinds, improved customer spending capacity and a market tilt toward profit-focused growth over top-line expansion.
The broker’s preferred names share several characteristics: niche market positions, predictable earnings streams and balance sheet strength that enables investment across cycles. Stifel emphasises businesses that can pair exposure to long-term trends - such as digital transformation and automotive safety - with careful margin and cash generation discipline.
Kainos Group
For larger-cap software exposure in the UK, Stifel points to Kainos Group as its top choice. The firm underlines Kainos’s strong track record in digital services, supported by longstanding relationships with government bodies and major enterprise customers. Key differentiators include high-quality project execution, a recurring revenue mix and a net cash position, all of which the broker cites as important for sustaining investment flexibility and capital discipline.
Stifel notes that near-term revenue growth is more measured than the rapid post-pandemic expansion Kainos experienced, but expects the company to benefit from a gradual re-acceleration in public sector IT spending and greater enterprise demand for cloud-native platforms. Those dynamics, the broker says, should support steady earnings progression and could lead to a revaluation of the stock if execution remains consistent.
Seeing Machines
Stifel is constructive on Seeing Machines based on the company’s increasing traction in automotive driver monitoring systems, a space the broker views as being driven primarily by regulatory and safety requirements rather than discretionary consumer spend. The firm highlights improving production volumes, growing royalty income and rising operational leverage as original equipment manufacturer - or OEM - programmes scale. While Stifel recognises Seeing Machines as a smaller and higher-risk name relative to substantive software peers, the broker sees meaningful upside if the company continues to execute and clarifies a pathway to sustainable profitability over the next 12 to 24 months.
Concurrent Technologies
Concurrent Technologies is characterised by Stifel as an under-the-radar beneficiary of expanding defence and security budgets. The company’s focus on ruggedised computing for mission-critical environments places it in a market with high barriers to entry and sticky customer relationships, according to the broker. With demand supported by geopolitical tensions and elevated defence spending, Stifel expects firm order books and margin resilience, making Concurrent an attractive way to access long-term technology investment tied to defence requirements.
Investment thesis and thematic exposure
Across the three picks, Stifel’s thesis rests on selective exposure to structural growth themes - digital transformation for enterprises and governments, automotive safety technologies driven by regulation, and defence-oriented computing hardware tied to security budgets. The broker favours names that combine such thematic exposure with earnings visibility, recurring revenue characteristics and balance sheets that permit capital allocation through slower periods.
Limitations and context
Stifel’s emphasis is on companies that can show disciplined margin management and robust cash generation while scaling within their niches. The broker also notes that some names will carry higher execution risk or more measured near-term growth compared with the sharp expansions seen in prior years.