Artificial intelligence (AI) has had a breakthrough. OpenAI’s ChatGPT is based on a large language model that can convincingly mimic the way humans use natural language. In fact, the technology is so good that it has passed most professional certification tests in recent months with above-average scores.
Put simply, AI is now roughly as smart as a high-school graduate. This has significant implications for the global economy. Industry insiders believe the biggest disruptions could be in healthcare and education.
Some Canadian companies have adopted the trend to unlock value in their core businesses. Here are the stocks that could be big winners if the AI race continues.
WELL Health
WELL Health Technologies (TSX: WELL) is one of the few healthcare firms in Canada to adopt AI quickly. The company rolled out its WELL AI Voice feature that uses machine learning and natural language processing to transcribe doctor-patient meetings.
Imagine if every doctor had an AI assistant that could take notes, store data, and analyze statistics to generate better outcomes for patients. That’s the promise of this new technology. The WELL Health team is capitalizing on the trend and rolling out this feature across its network of healthcare professionals.
Meanwhile, the stock remains undervalued. Its market value is just $1.1 billion, while revenue is expected to exceed $700 million this year. In other words, it trades at a price-to-revenue ratio of 1.57. The company also expects roughly $100 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). So, the stock is trading at 11 times EBITDA.
It’s a cheap high-growth AI stock that should be on your radar.
Docebo
Corporate education is another area that’s ripe for AI disruption. The most popular AI applications, such as ChatGPT and Mid Journey, are generative. Meaning they generate creative images and text based on prompts from users. This could be transformative for education.
Khan Academy, an online learning non-profit, has used this technology to integrate an AI teaching assistant for users. Now, all users can have a personalized tutor experience.
Corporate training software maker Docebo (TSX: DCBO) could see a similar trend. On its website, the company already claims to offer a “Docebo Virtual Coach,” which uses personalized data to craft learning experiences for corporate employees.
The company also offers an AI-Powered Deep Search function that collects all this newly generated learning material and pairs it with internal corporate data to create a search base for employees to refer to in the future.
Simply put, these new features could help a company communicate new processes and workplace changes to employees faster. This could unlock more value for Docebo’s user base and enhance revenue in the years ahead.
The company is worth $1.7 billion — 87 times trailing earnings per share. However, earnings are growing rapidly. Revenue was up 29% in the first quarter of 2023. Meanwhile, the bottom line swung from a $7 million loss last year to a $1.2 million profit in the first quarter of 2023. Double-digit growth probably justifies the stock’s high price-to-earnings multiple.
Keep an eye on this underrated AI opportunity.
