From Startups to Giants: A Spectrum of AI Investment Opportunities in Canada

Software companies like Shopify Inc (TSX:SHOP) are heavily investing in AI.

| More on:
Businessman holding AI cloud

Image source: Getty Images

Artificial intelligence (AI) has been the main theme of the markets in 2023. The entire year, companies betting big on AI have been rallying. Most of the momentum took place in the first half, but the trading in the second half has not been bearish; things have just been moving slower than they did in the early months of the year. In that period, ChatGPT was still new, and the hype surrounding the technology was palpable. Now that most people have used the app, its popularity seems to have waned, with three monthly traffic declines in a row. Still, chip companies like NVIDIA are making enough truck-sized piles of money in AI chips to keep people interested.

All of this leads us to an important question: Which Canadian companies are doing big things in AI?

There are several. Not all of them are necessarily reputed to be “AI companies” just yet, but they are using AI in various ways, and AI is becoming a bigger and bigger component of what they do over time. In this article, I will explore the spectrum of AI investment opportunities available in Canada.

Software companies

Software companies develop apps that have AI-powered features. One such company is Kinaxis (TSX:KXS). Kinaxis is a supply chain management software company that helps customers manage their supply chains. Supply chains are the processes that lead to the delivery of a product or service. They include raw materials, inventory, management processes, and customers.

Kinaxis Rapid Response lets customers access this data instantaneously. With the AI features that were recently added to Rapid Response, customers can also interpret and make use of the data nearly instantaneously. AI appears to have ignited a growth spurt in Kinaxis, which grew its revenue at 20% and its earnings at 358% year over year in the most recent quarter.

Another good example is Shopify (TSX:SHOP). Shopify is a Canadian e-commerce company that develops a platform businesses can use to sell their goods. It recently started using AI of the sort that ChatGPT runs on to help users create product descriptions. In the past, businesses had to spend copious amounts of time and money writing copy for their offerings. Now, with Shopify, they can simply enter a few basic facts about their product into a text input field and have a high-converting sales copy written in seconds.

Non-tech companies

Another category of AI company in Canada is “end-user” companies — that is, companies not traditionally thought of as tech companies that use AI in their operations. There are too many of these to count. Toronto-Dominion Bank has an AI research lab and has developed an AI-powered assistant for its mobile app. Canadian National Railway has partnered with Google Cloud to revamp its railway services and improve customer experiences. TD and CN aren’t normally thought of as tech companies. Nevertheless, their adoption of AI is very real.

Chip companies

Last but not least, we have chip companies. These develop the systems that AI runs on. Poet Technologies is one Canadian example of a chip company. It develops chips that integrate photonic and electronic systems in digital cameras. AI is rapidly being deployed in smartphone cameras, and Poet’s components are being used by industry-leading companies. So, it’s likely that this company’s optical breakthroughs will make their presence felt in the AI world one way or another.

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 Andrew Button has positions in Toronto-Dominion Bank. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Canadian National Railway, Kinaxis, and Nvidia. The Motley Fool has a disclosure policy.

More on Tech Stocks

Group of people network together with connected devices
Tech Stocks

This Is the Best Overlooked AI Stock on the TSX Today

This AI stock has been a top growing in the last while, but remains overlooked despite its strong portfolio and…

Read more »

Different industries to invest in
Tech Stocks

Why This AI Stock Surged 363% in Just 1 Year

This AI stock has surged this year by almost 400%! And yet this could only be the beginning for this…

Read more »

Online shopping
Tech Stocks

2 Growth Stocks Bay Street Might Be Sleeping On, but I’m Not

I'm not sleeping on Taiwan Semiconductor (NYSE:TSM) stock. Shopify (TSX:SHOP) is a Canadian stock with similar growth rates.

Read more »

Various Canadian dollars in gray pants pocket
Tech Stocks

3 No-Brainer Stocks to Buy With $50 Right Now

Looking for high growth? Dividends? How about just a huge portfolio? We've got it all with these three top stocks…

Read more »

A chip in a circuit board says "AI"
Tech Stocks

Canada Is About to Spend $2 Billion on Homegrown AI: 2 Stocks to Reap the Benefits

Here's how Canada intends to invest $2.4 billion in artificial intelligence. Nvidia (NSADQ:NVDA) and IBM (NYSE:IBM) stock could benefit.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

A Growth Stock I’d Buy Over Lightspeed in 2024

Lightspeed is a tech stock that is growing at an enviable pace. But this TSX growth stock is a much…

Read more »

A colourful firework display
Tech Stocks

Prediction: This Stock Is the TSX’s Next Growth Star

One outperforming tech stock is rising fast and likely to be TSX’s next growth star.

Read more »

question marks written reminders tickets
Tech Stocks

Nvidia’s Historic Stock Split: Will Investors See Bigger Gains?

Nvidia's (NASDAQ:NVDA) record 10:1 stock split entices many investors in several important ways. But some myths aren't technically correct.

Read more »