WHERE TO INVEST: Datatec is riding the global AI infrastructure wave from the JSE

We are in the inference wave of AI, which is just a fancy way of saying that people are actually using the AI models that a gazillion dollars have been poured into building. And in order to use this technology, you need a combination of hybrid cloud deployments and end-user devices.

There are many global technology companies singing this tune at the moment. Enterprise budgets are being thrown at the AI-driven replacement cycle for devices, while cloud providers are having a great time providing the infrastructure that is powering this trend.

But is there a way to play this theme on the JSE, or do you have to take your money to faraway lands?

The nuanced answer is that your exposure can be to those global markets via the JSE, with a company such as Datatec having succeeded where many other South African corporates have failed: building a global business. The group operates across 50 countries and has 11,000 employees.

Smells like home

The appeal of Datatec doesn’t just lie in the offshore track record. Alignment between investors and the founder is often cited as part of Datatec’s bull case, with founder and CEO Jens Montanana owning almost 20% of the shares in the company. He’s taken other investors on an incredible journey over the past 40 years.

Datatec’s last set of financial results were for the year ended February 2026, so they are now very out of date. The next period, being the six months to August 2026, has already ended. Investors are now waiting for the company to release results in late October.

But what investors would really like to see between now and then is the release of a trading statement, which would be necessitated by earnings growing at a rate in excess of 20%. This would carry on the trend we saw in the FY26 numbers, where Heps jumped by a juicy 56.5%.

The publicly available numbers might be stale, but there’s a fresh conference presentation that Datatec investors were able to enjoy in the past week. Conferences are a great way to learn about a company outside of the traditional results cycle, giving management teams the freedom to focus on the strategy rather than the numbers.

The RMB Morgan Stanley Off Piste Investor Conference is particularly useful, as it focuses on the mid-caps that don’t usually get enough attention in the market. “Off piste” is a skiing and snowboarding term for venturing into areas outside of the marked trails. Institutional investors are a fancy bunch.

The rest of us plebs may not get to attend the event, but at least we can work through the slide deck and draw some conclusions. The cover slide lands the message immediately, with Datatec saying that they are “tapping the AI infrastructure wave”.

Riding the wave

The first wave was the training and build-out process, where ChatGPT and Claude became household names. The second wave is inference and edge computing, which is where enterprise deployments are taking these models to end users. The third wave is expected to be agentic and physical AI, which is when things really start to get interesting in terms of how we stop the robots from turning our planet into a Terminator movie set.

The cleverness of Datatec’s model lies in how they participate in this growth story. The company hasn’t had to raise capital and spend a fortune on model development, nor have they invested in expensive data centres and GPUs. Instead, Datatec sits elsewhere in the value chain, an area that many investors would see as the preferred risk-reward trade-off.

They do this through two divisions. The Logicalis division is all about integration and management, which means a higher-touch service model that builds relationships with global clients. Although they push for recurring revenue, they are also able to earn project fees. The Westcon division is very different, being a hardware and software distribution business that is driven mainly by volumes in hardware and the opportunity to drive recurring revenue from software.

These are distinct models, but they both benefit from a world in which companies, enterprises and governments are all figuring out how to use AI technology optimally. Whether there’s a need to understand more about the correct deployment or to just obtain the required hardware and software, Datatec is there to fight for share of wallet.

For investors, the key is going to be whether Datatec can drive improving quality of earnings in this environment. In FY26, a revenue increase of just 3.3% was enough to drive adjusted Ebitda growth of a meaty 17.8%. This was thanks to better gross profit margin, speaking directly to the mix effect of the group’s services. The jump in growth from adjusted Ebitda to a 56.5% increase in Heps was driven by a reduction in net finance costs.

How much of this will repeat in the interim period? Will Datatec be able to report revenue growth that ties into the broader narrative they are putting forward around AI wave evolution and their ability to participate?

Finding value

With the share price up by nearly 30% in the past year, the market isn’t blind to the Datatec story. But the price-earnings multiple of just 11.4x is anything but demanding, suggesting that the market is either sceptical of the risks to the underlying growth story, or simply unwilling to put a premium multiple on a technology company that relies so much on a distribution business.

Datatec’s R19-billion market cap may make it an off-piste option, but certainly not an obscure one. A lot is going to ride on the next set of results and how the market assesses the sustainability of growth versus the current valuation. DM