Revolutionizing Industries: Why Every Canadian Should Consider AI Stocks

Canadian tech stocks like Shopify Inc (TSX:SHOP) use AI to improve customer experiences.

| More on:

Artificial intelligence (AI) is revolutionizing industries so thoroughly that it is changing the global investment landscape. Gone are the days when an investor could simply invest their money in a company that was cheap, profitable, and growing.

Today, investors need to consider whether or not their portfolio companies are about to be made obsolete by AI. Although AI hasn’t made any entire industries obsolete just yet, some say that it’s about to. Examples of industries considered vulnerable to automation include search, supply chain management, and accounting. All of these industries still exist, but there’s much money to be made disrupting them.

In this article, I will explore the changes that AI is making, and why, arguably, every investor needs some AI exposure in their portfolio.

The AI shakeup

The reason why AI is such a lucrative investment opportunity — and why having no exposure to it is such a risk — is because it can do the kinds of tasks human beings do cheaper and faster. Until recently, it was only fairly routine tasks being automated by AI.

Now, however, AI is doing some pretty sophisticated work. Among the skillsets that have seen major strides by AI are copywriting, art, and legal research. Some think that AI will get so good that people in these industries will be put out of work and companies in them will go out of business. That remains to be seen, but, certainly, there are efficiency gains to be made, and companies doing AI stand to make piles of money.

The AI stocks I own

When I say that investors need exposure to AI in their portfolios, I’m not kidding. I’m putting my money where my mouth is. Over the last few years, I’ve bought a number of AI stocks:

  • Taiwan Semiconductor Manufacturing: the leading contract manufacturer for AI chip companies.
  • Alphabet: one of the three big tech companies (alongside Microsoft and Meta) considered AI leaders.
  • Alibaba: a Chinese company with whose LLM is already being used in several of its business units. Note: this is an extraordinarily volatile stock that’s easy to get scared out of; do not buy it unless you are extremely experienced and comfortable with volatility.

Canada’s very own AI stocks

Having looked at a few stocks that are doing big things in AI, it’s time to ask the all-important question: Are there any Canadian tech companies doing important work in AI?

Yes, there are, and a few of them are publicly traded!

The Canadian company that (in my opinion) is doing the most interesting things in AI right now is Kinaxis. It is using AI to help businesses make better predictions about key supply chain variables like inputs, inventory and customer purchasing patterns. This is not the kind of AI that ChatGPT or MidValley run on, but it’s AI nonetheless.

The Canadian company that’s doing the most of the type of AI that’s getting publicity these days is Shopify (TSX:SHOP). It is an e-commerce company that uses ChatGPT-like language models to help companies create product descriptions.

Here’s how it works: a company will sign up for Shopify to create a website that sells its products. Then someone at the company will go into their Shopify dashboard and enter some extremely basic facts about their product into a text field. Shopify’s AI will then spit back a product description based on prior descriptions it was trained on — descriptions that are proven to work. Thanks to this and other great features, Shopify has thrived as a company, with 26% revenue growth and $276 million in free cash flow in its most recent quarter.

If you wanted to check out a Canadian company that does “AI” in the way the media means when it uses that term, Shopify would be it. I personally think Kinaxis’s use of AI is more interesting than Shopify’s, but its AI is unique and not ChatGPT-like. SHOP is the one if that’s the kind of AI you’re interested in.

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.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Andrew Button has positions in Alphabet, Alibaba, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Alphabet, Kinaxis, Meta Platforms, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

More on Tech Stocks

bulb idea thinking
Tech Stocks

The Smartest Canadian Stock to Buy With $1,000 Right Now

Strong financials, booming demand for its services, and an expanding presence in AI and cloud computing hardware make Celestica the…

Read more »

doctor uses telehealth
Tech Stocks

3 Tech Stocks I’m Looking to Buy in February

These tech stocks will deliver solid gains driven by the deployment of AI and investments in omnichannel commerce and digital…

Read more »

Burning semiconductor CPU
Tech Stocks

Is AMD in Trouble After Wednesday’s Stock Drop?

Shares took a painful hit after the chip designer's fourth-quarter report.

Read more »

An investor uses a tablet
Tech Stocks

If I Could Only Buy and Hold a Single Stock, This Would Be it

Despite more than doubling in value over the last six months, I still find BlackBerry stock undervalued based on its…

Read more »

chip with the letters "AI" on it
Tech Stocks

Celestica Stock Trading at All-Time High: What’s Next?

Celestica stock is beating Nvidia, surging 1,358% since October 2022. Today, it is trading at its all-time high. Is there…

Read more »

dividend growth for passive income
Tech Stocks

2 Growth Stocks That Could Turn $10,000 Into $24,800 by 2030

These resilient growth stocks could grow your money.

Read more »

Credit card, online shopping, retail
Tech Stocks

Where Will Shopify Shares Be in 5 Years?

In addition to Shopify’s consistently growing sales and expanding profit margins, its focus on long-term growth initiatives could help its…

Read more »

money goes up and down in balance
Tech Stocks

2 TSX Stocks to Buy and 2 to Avoid in the Looming Trade War

The looming U.S.-Canada trade war has changed the business environment. Here are some TSX stocks to buy and avoid in…

Read more »