Artificial intelligence, or AI, is no longer “the next big thing” in the tech space. Rather, it’s very much THE big thing right now in every aspect of our lives. More than a mere buzzword in the stock market, it’s a phenomenon driving unanticipated changes worldwide.
Several tech companies trading on the TSX are involved with the technology. Aptly given the additional label of “AI stocks” in light of the emerging trend, these stocks are also becoming important holdings, helping investors grow their wealth.
Today, we will look closely at two tech stocks that can give you exposure to this industry with the potential to deliver massive, outsized gains in the long run in your self-directed investment portfolio.
Shopify
Shopify (TSX:SHOP) is a tech stock many Canadian investors likely already have on their radars. The $140.22 billion market capitalization e-commerce company rapidly became the largest TSX stock by market cap after it became public in 2015.
It delivered several years of explosive growth, especially between 2019 and the tail end of 2021. When the tech sector went through a meltdown, its share prices declined rapidly.
The stock is currently on an upward trend. As of this writing, it trades for $109.13 per share, up by 14.46% since its January 3rd level. The company’s solid financial performance in 2023, along with a couple of strong moves by the management, are contributing to this rally.
If a “soft landing” in the economy leads to improved economic activity, Shopify can deliver more growth. Its successful AI integrations will play a vital role in paving the way for a new era of success for the stock and its investors.
OpenText
OpenText (TSX:OTEX) is not a tech stock that saw particularly explosive growth. However, the veteran $15.31 billion market cap company headquartered in Waterloo is likely going to see immense growth soon.
The company develops and sells enterprise information management software. OpenText stock has made several moves in the last few years that grabbed investor attention, from Micro Focus to AI. The company also divested whatever didn’t fit its needs to raise US$2.3 billion in 2023.
OpenText is also an interesting tech stock in that it offers decent dividends to its shareholders. As of this writing, OpenText stock trades for $55/72 per share and pays its investors at a 2.43% dividend yield. Up by 30.27% from its 52-week low, it can be a good stock to consider adding to your self-directed investment portfolio to leverage the power of AI.
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Foolish takeaway
Buying AI stocks can be an excellent investment strategy, but it is important to be careful where and how much money you allocate. Identifying companies that can provide long-term and sustainable growth is essential because several tech stocks are exploding purely due to market sentiment.
Provided the underlying companies have solid fundamentals and AI products are already making waves in the market, you can consider allocating some of your investment capital to them. While not without their risks, Shopify stock and OpenText stock seem like solid bets to consider to this end.
