1 Canadian Stock That Could Rise on the AI Boom

Thomson Reuters (TSX:TRI) is an information powerhouse that could win as it makes use of gen AI technologies.

| More on:
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept

Image source: Getty Images

The generative artificial intelligence (gen AI) boom has been the hot, go-to trade over the past year or so. As impressive as ChatGPT (and its GPT-4 model) is, the explosive rally has driven up price-to-earnings (P/E) multiples by quite a bit across the board in the tech scene. Depending on which metric you look at (the P/E ratio is just one example), the broader stock market certainly does look a tad on the frothy side, even if gen AI helps fuel a productivity boom for the ages.

While AI and its benefits could certainly fuel greater gains for investors through 2024 and 2025, investors must be aware of the valuation gauge and not just hand over their investment dollars without conducting a very thorough valuation. Perhaps that would entail forming a discounted cash flow model that analyzes each one of the variables that gen AI could help jolt over the next five years and beyond.

Markets feel wobbly once again. Don’t overpay for AI exposure!

In any case, I think it’s hard to argue that we’re overdue for a bit of a mild market correction. Whether markets take a breather going into March remains to be seen. Regardless, I’d view a pullback as akin to cutting the froth right off the top of a mug of beer. It’s not exactly a bad thing. In fact, it could be a good thing for investors who have extra cash sitting on the sidelines, waiting to be put to work on more attractive opportunities.

Without further ado, let’s check out one Canadian stock that stands to be a big AI beneficiary over the long run. And if shares pull back alongside the rest of tech and the market, they may prove an intriguing opportunity on a dip. Let’s get right into the names.

Thomson Reuters: Harnessing the power of AI

Thomson Reuters (TSX:TRI) isn’t exactly a firm that comes to mind when one thinks of the hottest gen AI tech and tools. The company is a multinational information conglomerate and has become a trusted brand in the media landscape. The firm recently clocked in some solid fourth-quarter results, alongside a nice dividend hike.

Looking ahead, the firm could leverage AI in a way to jolt its top and bottom lines. The firm already makes pretty good use of AI. And if management can find success with their recent gen AI platform, I think it will be tough to stop the long-term momentum in the stock as growth has a chance to go into overdrive.

At 27.1 times trailing P/E, I view TRI stock as cheap, even if shares are just shy of all-time highs. The company is innovating in the AI scene and could stand to be one of the bigger Canadian AI beneficiaries. At the end of the day, information and data are powerful forces as we move forward with the global AI boom. At the end of the day, Thomson Reuters is a king among men when it comes to information.

I’d encourage investors to give Thomas Reuters and their AI ambitions a look if you seek relative value in the scene. I find shares to be a tad on the undervalued side following a stellar Q4 — one that could precede more exceptional quarters.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Tech Stocks

alcohol
Tech Stocks

3 Magnificent Stocks That Have Created Many Millionaires, and Will Continue to Make More

Shopify stock is an example of a millionaire-maker stock that is likely to continue to thrive in the long run.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

Why Hut 8 Stock is Up 44% in the Last Week

Hut 8 stock (TSX:HUT) has surged in the last week, and even more year to date. But if you think…

Read more »

Coworkers standing near a wall
Tech Stocks

Why Nvidia Stock Fell 10% Last Week

Nvidia stock (NASDAQ:NVDA) fell by 10% last week after its competitor announced an earnings date, but without preliminary results.

Read more »

Businessman holding AI cloud
Tech Stocks

3 Artificial Intelligence (AI) Stocks to Buy With $500 and Hold Forever

Canadian AI stocks like Open Text Corp (TSX:OTEX) are changing the game.

Read more »

Online shopping
Tech Stocks

Should You Buy Shopify While it’s Below $100?

Here's why Shopify (TSX:SHOP) remains a top long-term growth stock investors should consider buying below the key $100 level.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Should Investors Buy Lightspeed Stock Ahead of Earnings?

Lightspeed (TSX:LSPD) stock has served a period of drama for investors in the last few months, so what can investors…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

TFSA Investors: 1 Top Tech Stock to Buy With $500

TFSA investors can consider owning quality tech stocks such as Datadog to benefit from outsized gains in 2024 and beyond.

Read more »

Dots over the earth connecting the world
Tech Stocks

Hot Takeaway: Concentration in 1 Stock Can Be Just Fine

Concentration in one stock can be alright under the right circumstances, and far better than buying a bunch of poor-performing…

Read more »