I’m always on the lookout for top UK shares to add to my ISA or SIPP. I usually focus on the goal FTSE100 companies that suffered some losses. I am instinctively drawn to companies that have fallen out of favor. The goal is straightforward: pick them up cheaper, ensure a higher yield, and then wait patiently for their recovery.

However, it doesn’t always work. Sometimes momentum stocks surge forward while beaten down stocks receive further declines. But overall it served me well. So where are the opportunities today?

Even though the FTSE 100 is hovering above 10,000, there are plenty of laggards. Currently, most operate in the data and analytics sector, where investors fear that artificial intelligence could destroy classic business models.

Panic grips the FTSE 100 sector

Accounting software specialist Sage dropped by almost 40% in a year. Credit agency Experiment dropped by 35%. Pearson, RELAX AND London Stock Exchange Group they also took a huge pounding. Until recently, they were market darlings with price-to-earnings (P/E) ratios exceeding 30. Now they are treated as if they were at risk of extinction.

I suspect the market may overreact. Artificial intelligence is powerful, but it has drawbacks. It relies on trusted data sources, much of which is provided by these companies. These companies are also incorporating AI into their own platforms, which can improve customer offerings and productivity. However, once fear grips investors, it is complex to get rid of it. Any modern AI product launch has the potential to disturb the markets again. I think the threat has been overblown, but it will take time to remove the shadow. These are exactly the stocks I would like to buy, but I’m also terrified at the moment.

I learned some challenging lessons investing in an ailing beverage giant Diageo (LSE: DGE). It has endured a brutal period, with its shares almost halving in the last three years. The decline, which was initially driven by the weakening of Latin America and the Caribbean, turned out to be something broader. Sales fell in Western markets and China. Concerns about U.S. tariffs and changing drinking habits added to the woes.

Diageo shows signs of life

I kept averaging down and the stock kept falling. Then in January I went bigger and committed more capital. Since then, there have been some initial signs of improvement. The stock price is still down 17% for the year, but is up almost 10% over the past month. Of course, it could be a false dawn. But modern chief executive Dave Lewis has a clear mandate to take drastic action. His achievements on Tesco suggests that he is not afraid of complex conversations. Diageo needs them.

There are long-term concerns. Weight loss medications can limit your alcohol intake. Gen Z seems to be drinking less. However, social drinking has been a part of human life for centuries. I suspect that when disposable income returns, our desire will return.

The stock is trading with a price-to-earnings ratio of 15.3. The trailing yield rose to 4.35%, although Lewis could cut shareholder payouts as part of a reset. However, I think Diageo is starting to see featherlight at the end of the tunnel when these once powerful data assets may have only just entered it.