After its share price crashed 40% in 3 months, is this a low fundamental value stock?
In the first week of February 2026, a number of UK technology-focused stocks saw their share prices fall by double digits, while others sat in the stock market near value.
The Kainos Group (LSE:KNOS) is one such business whose market was already in bad shape as of early December 2025. And now, going forward, the group’s price-to-earnings ratio is sitting at a decade low of just 14.8!
So, is this growth-turned-value stock now a screaming buy for long-term investors? Or is there a brewing problem?
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The risk of AI disruption
For most of its history, Kainos has been a digital specialist, helping businesses and governments implement software solutions to automate processes and improve efficiency.
But, in recent years, management has been turning the company into a software-as-a-service business by creating bespoke plugins for Work day human capital management (HCM) platform. And while its toolkit is still niche, it’s proving popular, delivering impressive and scalable revenue growth.
As of November 2025, its software segment is now responsible for 20% of the top line. But in the medium to long term, that could increase significantly, especially as the company aims to reach £200m in annual recurring revenue by 2030, up from £77.5m today.
However, right now, that means the business remains largely dependent on supporting customers’ digital transformation projects. And that’s something that could be exposed to major AI disruption. After all, why would a company hire large teams of technicians to code and maintain systems when AIs can do most of the work?
This fear of disruption is what has fueled the technology’s recent sell-off, and unsurprisingly, Kainos has been caught up in the controversy.
Opportunity to buy?
Buying Kainos shares today is a big bet that the company is either an AI enabler or an AI victim. There’s no denying that the company’s current consulting-style primary income is at risk. But with its existing multi-year contracts, the group appears to have more than enough time to adapt and reallocate resources to aggressively expand its software arm.
This obviously presents a significant risk of execution. And it’s worth highlighting that by building tools for the Workday platform, the business is also tied to the long-term trajectory of Workday and its fight against competing HCM platforms that emerge. The Oracle again SAP.
Still, with Kainos shares now trading at a new low not seen in more than a decade, I can’t help but wonder if the market is underestimating this business. And with a good track record of navigating both favorable and unfavorable operating environments, this certainly looks like a potential acquisition opportunity that deserves further investigation.
However, it is not the only business that has been hit during the latest technology sales that has caught my attention this month.
