Beyond Microsoft: 2 AI Stocks That May Be Better Buys

Canadian investors should look to nibble on Docebo (TSX:DCBO) and another impressive AI stock on any weakness.

| More on:
Businessman holding AI cloud

Image source: Getty Images

Shares of enterprise giant Microsoft (NASDAQ:MSFT) have been an incredible performer so far this year, with an astounding 35% in gains year to date. Undoubtedly, the broader tech averages have been in full-on relief rally mode this year.

And though Microsoft’s exposure to OpenAI — the innovative company behind the profound artificial intelligence (AI) phenomenon that is ChatGPT — makes it virtually a must-own for any long-term investors looking to make the most of the ongoing AI upcycle (or revolution, as some call it), I think investors must always be mindful of the price of admission.

Microsoft stock looks pricey after its hot run

Microsoft stock is fresh off a sudden correction, now off around 10% from its 52-week highs. Still, the stock’s up considerably on the year, as previously noted. And though it’s impossible to time the bottom in the market or any stock, investors may wish to look beyond Microsoft for AI exposure.

At writing, shares of MSFT go for 33.4 times trailing price to earnings. That’s not exactly a bargain. There’s a lot of AI hype priced in. And in the second half, I think hype could die down in a way such that investors may be able to punch their ticket into the name at less than $300 per share.

Either way, let’s look at two AI stocks that may be better buys for the next two to three years for Canadian investors who don’t want to be left hanging as generative AI technologies like large language models unlock a new door of growth.

Nvidia

First up, we have graphics-processing unit (GPU) maker Nvidia (NASDAQ:NVDA), which is more or less the go-to AI stock to target these days. Even after the stock’s latest 11% correction off its highs, shares remain up 196% year to date. Those are some serious gains. And though the valuation is at lofty heights (more than 220 times trailing price to earnings!), I view the stock as worth a tiny nibble into weakness.

An 11% dip is a drop in the bucket compared to a year-to-date rally of almost 200%! As Nvidia stock retreats further, perhaps as part of a market-wide correction, it may wish to watch the stock. At the end of the day, Nvidia offers AI chips that seem to be miles ahead of the competition. If the AI revolution really has begun, more good times could be in the cards for Nvidia. Indeed, it seems like there aren’t enough top-of-the-line AI chips to go around.

For now, though, the stock has had its run and could cool considerably over the coming months.

Docebo

Docebo (TSX:DCBO) is a lesser-known AI play that lost its way as a post-pandemic hangover period set in. The company develops learning management system software, which can help train and inform workers regardless of where they choose to work. Remote work, I believe, remains the future. And in that regard, I continue to view Docebo’s software as on the right side of the trend.

Further, Docebo has made good use of AI to help it further improve its suite. The company has been making small acquisitions in the AI space and could continue to in an effort to bolster its AI firepower. For now, the $1.62 billion tech company is flying under the radar of most tech investors. The stock is down 55.5% from its high hit back in 2021. Though it could take years to hit new heights, I am a fan of the product and the firm’s commitment to investing in AI tech.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of Microsoft. The Motley Fool recommends Docebo, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

More on Tech Stocks

man touches brain to show a good idea
Tech Stocks

Nvidia Stock Becomes World’s Most Valuable Company: Buy Now or Beware?

Nvidia (NASDAQ:NVDA) stock is now the world's highest valued company, with a market cap of US$3.34 trillion. So, is the…

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Lightspeed (TSX:LSPD) stock was supposed to surge after Dax Dasilva's return, yet it's still stagnating. So, what should investors do…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 of the Best Canadian AI Stocks (With Dividends) to Buy Now

OpenText is an AI stock that trades at a significant discount to consensus price target estimates in June 2024.

Read more »

online shopping
Tech Stocks

3 Reasons to Buy Shopify Stock Right Now

Improving earnings quality, sustained cash flow growth, and another reason support a buy-the-dip thesis on Shopify (TSX:SHOP) stock today

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 Canadian Growth Stocks I’d Stash in a TFSA for the Long Run

Here's why Constellation Software (TSX:CSU) and Shopify (TSX:SHOP) are two top Canadian stocks long-term investors should consider.

Read more »

Wireless technology
Tech Stocks

Predictions for the Top Canadian Tech Stocks in June 2024

Whether it's the growth of artificial intelligence or e-commerce, these three tech stocks offer massive growth in June and beyond.

Read more »

Golden crown on a red velvet background
Dividend Stocks

These 5 Stocks Have Unstoppable Dividend Growth

These five stocks can form a diversified stock portfolio of dividend aristocrats from the TSX.

Read more »

Online shopping
Tech Stocks

Up 42% from 52-Week Lows, Is Shopify Stock Still a Buy?

Shopify (TSX:SHOP) stock looks like one of Canada's best growth stocks. And right now, it looks like it's on sale,…

Read more »