Opinion: These Are the Top Canadian AI Stocks to Buy

Does Canada have AI stocks? There are plentiful tech stocks that are leveraging the AI potential to drive growth.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

Social Media Profiles

Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published August 13, 2024 8:00 pm EDT

Buying into an artificial intelligence (AI) future can be risky as well as rewarding. And if you think AI stocks are overvalued, look at them from a 10-year horizon. In the 2008 mobile revolution, Apple beat the market leader, BlackBerry. Many thought Apple was overvalued then. But the iPhone market disruption proved all fundamentals wrong. To this date, the iPhone is its most successful product. That is the thing with technology. It can be disruptive, and even a company with not much experience can beat the market juggernauts if they crack the tech code.

A microchip in a circuit board powers artificial intelligence. — Source: Getty Images

Two top Canadian AI stocks to buy

Holding on to this logic, here are two Canadian stocks that may not have aced the AI game like Nvidia but do hold the potential to make a difference.

Telus International

This stock is not the telecom operator but its spun-off arm, Telus International (TSX: TIXT). The company provides IT services and multilingual customer service to global clients. It has developed a GenAI support tool that helps enterprises get fast and intuitive responses to their queries without compromising their privacy. When Generative AI became a craze, there were concerns about the ethical use of AI and giving it too much power.

As AI is more deeply intertwined into our lives, several governments will levy laws around the use of AI. Such legislation could affect many AI stocks. The right way to grow is not fast but strong. Telus International is building a strong foundation of AI data solutions that meet ethical standards. This will encourage organizations to adopt AI without worrying too much.

The company came into the limelight for the wrong reasons, as it used AI-generated content to mimic Indigenous art. The art community in Australia complained, and Telus stopped it and promised never to use the tech again. While this was negative news, it shows Telus is experimenting with several AI use-case scenarios to serve its customers better. In this process, it is learning what works and what doesn’t.

Telus International stock fell more than 50% in the August tech stock selloff and is trading at its all-time low of around $4. It is a good time to buy the stock and hold it for the long term. Once the economy revives and the company perfects its AI solutions, it could leverage its existing digital customer base to cross-sell AI solutions.

Hive Digital Solutions

Hive Digital Solutions (TSXV:HIVE) is not directly involved in AI but is looking at revenue streams to make more money from its Nvidia graphics processing units (GPU)-powered data centre. The data centre can handle high computing workloads. The company keeps adding GPUs to increase the computing power for Bitcoin mining. It could provide AI data centre computing power to aspiring new companies looking to adopt AI.

At present, the cloud business accounts for a small portion of Hive’s revenue. However, we are talking 10 years from now. A decade is a long time, and with the speed at which technology is evolving in the 5G landscape, every bit of AI computing power would make millions. Trading below $4, Hive stock isn’t too expensive. If AI or blockchain cloud computing works out, its scaling capacity could help you earn $400,000 in a decade. If AI doesn’t work out, you always have Bitcoin to bank on.