As generative artificial intelligence (generative AI) continues to draw the attention of more than just investors, you may be wondering if it’s worthwhile to pick up one of the AI innovators south of the border. Though there are plenty of tech stocks in Canada that are worth attention, I do think that it doesn’t hurt to broaden your exposure, especially if it’s generative AI that you seek to expose your portfolio to.
Now, the price of admission is not cheap, with such revolutionary AI products drawing in quite a bit of heat from investors willing to pay a premium price tag to punch their ticket. With interest rates likely heading lower from here, the AI tech boom may still be in its early innings.
Though the AI rally could end in a bubble of sorts, I think we’re nowhere close to entering such territory.
Not when shares of enterprise king Microsoft (NASDAQ: MSFT) trade at a rather modest multiple of 36.5 times trailing price-to-earnings (P/E) after slipping slightly from its high to around $404 and change per share.
Microsoft stock: The AI knight in shining armour
Microsoft is trading on the expensive side of its historical range. But it has every right to be at these levels, given its knack for innovating on the front of AI. Whether we’re talking about Copilot, Bing (with a bit of AI sprinkled on), or the firm’s investment in Sam Altman’s legendary OpenAI, I believe Microsoft is one of the companies that ought to be a mainstay in the portfolios of many.
It’s not just an AI play but a company that’s basically immune to the growth-eroding effects of the corporate aging process. How many companies were in the top 10 firms by market cap for this long? In that regard, Microsoft is a standout, with very smart people, like its CEO Satya Nadella, running the show. And generational geniuses (Sam Altman) are never too far away from the firm.
As ChatGPT, Copilot, and other AI large language models (or chatbots) keep on advancing, I think it’s tough to make a case for trimming profits on shares of MSFT. If anything, it’s a buy, even near its recent high. AI will create haves and have-nots. At this juncture, it looks like Microsoft is in shape to be one of the biggest haves, perhaps in a world comprised of many have-nots.
Shopify stock: Canada’s technological innovator
As Canadians, I’m sure we’ll all root for e-commerce firm Shopify (TSX: SHOP) as it looks to take on rivals in the generative AI age. With its “Magic” AI tools and openness to trying new technologies (think AR, VR, and all the sort), I find Shopify has what it takes to continue gaining ground on peers, as it looks to sweeten its ecosystem and bring new time-saving products to its merchants.
With a solid enterprise offering and one of the smartest CEOs (Tobias Lutke) at the helm, Shopify stands out as a founder-led firm that has every right to be included in an exclusive tech cohort such as the Magnificent Seven. Is SHOP stock a tad pricey here? At nearly $110 per share, perhaps it’s a bit pricey if you seek deep value. However, the next correction may not be far away as the rally looks to enter the latter innings.
