Artificial Intelligence: Canada’s Next Big Investment Frontier

Canadian companies like Kinaxis Inc (TSX:KXS) are betting big on AI.

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Artificial intelligence (AI) is the next big investment frontier for Canadian companies. Ever since the launch of OpenAI’s ChatGPT, the potential of artificial intelligence to revolutionize industries has been apparent. Canadian companies have been among the most notable adopters of the new technology. From e-commerce to supply chain management and everything in between, Canadian companies have been making waves in AI. In this article, I’ll explore two Canadian companies that are doing big things in AI.

Canada’s big AI players

Shopify Inc (TSX:SHOP) is one Canadian tech company making big moves in AI. It is a major e-commerce company, the world’s biggest supplier of e-commerce shopping cart technology. Shopify’s platform allows vendors to host their own websites complete with e-commerce tools such as product catalogs and payments. Unlike Amazon, it does not have one central website that all of its vendors sell their products on. Instead, it provides technology that allows vendors to sell on their own websites. This method has its pros and cons. On the plus side, Shopify takes smaller fees than Amazon does. On the con side, Shopify really offers very little in the way of product discovery. Vendors are on their own for traffic.

Shopify is currently using AI to help vendors create product descriptions. It uses generative AI of the type that ChatGPT runs on to create compelling product descriptions that drive sales. This might sound like yet another “GPT wrapper app,” but think again. Shopify trains its AI on proven product descriptions that worked for past users to create new descriptions that convert well. It’s a formula that has worked well for AI copywriting apps used by other businesses. It seems to work well for Shopify’s users too.

Kinaxis Inc (TSX:KXS) is another Canadian company doing big things in AI. It’s a pretty old company, having been founded in the 1980s. What it does is it provides supply chain management software to businesses. The “supply chain” is the set of suppliers and items that go into making the products a company sells. It includes things like suppliers, factories, raw inputs, inventory, products for sale on the storefront, and customers themselves.

Kinaxis is a big player in supply chain management. Its software lets users keep track of all the components of the supply chain. For example, using KXS software, an end user can forecast key demand times, the amount of inventory they will need to feed the demand, and the raw inputs they will need (if they build some of the inventory themselves in-house). Kinaxis has always empowered businesses to do things like this, but now with the AI built into KXS’ software, businesses can do it better than ever before.

Will they make it to the big leagues?

Having noted the interesting things that Canadian companies are doing with AI, it’s time to ask the all-important question:

Will they hit the big leagues with this stuff?

Shopify arguably already has. Doing $4.6 billion a year in revenue, it’s a pretty large company. Its profits are still measured in the millions, but if it can keep growing its revenue at 26% year over year, it’s only a matter of time before it becomes a billion plus earner.

Kinaxis is a smaller company, but it grew its earnings at 353% last quarter, and its revenue at 20%. It’s not quite the big player that Shopify is, but it has potential. On the whole, it looks like Canadian companies have the potential to hit the big leagues in the world of AI.

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Amazon and Kinaxis. The Motley Fool has a disclosure policy.

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