Did you know that Canada is home to some of the most innovative artificial intelligence (AI) software companies in the world? Going by media coverage, you’d think that the entire AI industry is just NVIDIA and OpenAI. But in fact, there are Canadian companies doing big things in AI too, from supply chain management to e-commerce. In this article, I will explore three such stocks and the qualities that make them true AI titans.
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Kinaxis
Kinaxis (TSX: KXS) is one of Canada’s most successful AI software companies. It is not an AI startup that appeared out of nowhere in the last two years; rather, it is an established software company that recently began incorporating AI into its offerings.
Kinaxis helps businesses keep track of supply chain information. That includes things like orders, raw inputs, customer purchasing patterns, and more. Using this information, businesses can more effectively manage their supply chains. For example, with actionable data on customer purchasing patterns, businesses can forecast how much inventory they will need for a particular time of year.
Kinaxis’s Rapid Response platform has always allowed users to do things like this. Now, with AI, they can do it faster than before. Kinaxis’s AI-powered software seems to be a smash hit, as the company’s revenue increased by 20%, and its earnings increased by 72% in the trailing 12-month period.
Shopify
Shopify (TSX: SHOP) is a Canadian tech company that develops a website builder and payments platforms. It helps businesses host their own e-commerce websites. In exchange, it gets a recurring subscription fee as well as a small cut of sales.
Shopify is using AI in several different areas of its business. For example, it uses generative AI to help vendors write compelling product descriptions. All the user has to enter is a simple, factual description of what their product does or is. Shopify then uses ChatGPT-like language models to turn that basic factual description into a compelling product description.
Shopify seems to be doing well with its AI-powered tools. Its revenue increased 23% last quarter, and its free cash flow was positive. Overall, this is one of Canada’s most exciting tech stocks.
OpenText
OpenText (TSX: OTEX) is a Canadian content management software company. It develops content management systems, text analysis software, and more. Its AI use cases are similar to those of ChatGPT, being based on large language models (LLMs). It can sort data, extract insights from text, compose new text, and more.
OpenText has had something of a growth spurt in the last year. In the trailing 12-month period, the company’s revenue grew 51%, probably driven by the demand for AI enterprise products from companies. The high growth rate seen in the last 12 months was not typical for the company, which in prior years had not been growing rapidly at all. It remains to be seen whether this year’s AI-fuelled growth will last. What we know for sure is that OTEX is one of the cheapest AI stocks out there, trading at 7.5 times earnings. I can’t quite endorse the stock, but I’d say it’s worth a look.
