The stock market dynamics keep on changing with time. Recently launched generative artificial intelligence (AI) tools, including Microsoft-backed Open AI’s ChatGPT and Alphabet’s subsidiary Google’s Bard chatbot, have attracted investors’ attention. Whether you like or dislike such generative AI-powered chatbots, you can’t deny that AI, in general, has the potential to transform most industries and businesses in the future. Given that, it makes sense for long-term investors to add some quality, AI-focused stocks to their portfolios to expect handsome returns on their investments.
In this article, I’ll highlight two of the best Canadian tech stocks you can buy now to feed your portfolio for an AI future.
Kinaxis (TSX:KXS) is an Ottawa-headquartered tech firm with a market cap of $4.5 billion, as its stock currently trades at $160 per share after advancing by nearly 5% in 2023 so far. KXS primarily focuses on providing cloud-based software solutions to help businesses in integrated planning and digital supply chain management. Its planning and risk-monitoring tech solutions try to combine human intelligence with AI.
Last week on August 9, Kinaxis announced the second-quarter (Q2) financial results of its fiscal year 2023 (ended in June). During the quarter, its revenue climbed 30.9% YoY (year over year) to US$105.8 million with the help of the solid performance of its software-as-a-service (SaaS) and subscription-based tech solutions. As a result, Kinaxis’s adjusted quarterly earnings jumped 78.6% from a year ago to US$0.25 per share.
Despite increasing competition and macroeconomic challenges, the AI-focused tech company continues to post strong customer wins, reflecting its ability to keep growing even in difficult economic environments. These positive factors, along with consistently growing demand for Kinaxis’s AI-based digital supply chain solutions, make its stock really attractive to buy now and hold for the long term.
Open Text stock
Open Text (TSX:OTEX) could be another attractive Canadian tech stock for investors seeking to benefit from the ongoing AI boom. This Waterloo-headquartered company currently has a market cap of $13.9 billion, as its stock trades at $51.13 per share after rallying by 26.5% year to date. Open Text mainly focuses on providing information management solutions to its customers. Its decent 2.6% annualized dividend yield makes this Canadian AI stock even more attractive.
The Canadian tech firm announced the fourth quarter of its fiscal year 2023 financial results earlier this month on August 3. During the quarter, Open Text registered a strong 65.2% YoY gain in its total revenue to US$1.5 billion. Its adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 47.6% from a year ago to US$462.9 million. Similarly, its adjusted EBITDA margin expanded to 31.1% last quarter from 29.3% in the previous quarter.
In its fiscal year 2023, Open Text made major investments in cloud and AI technologies. These increasing investments and its recently announced initial AI products like opentext.ai and OpenText Aviator™ could help the company accelerate its financial growth in the long term. Given that, you can expect this Canadian AI stock to continue its upward trend.