American tech firm NVIDIA is the global leader in artificial intelligence (AI) computing. The graphics processing unit (GPU) manufacturer continues to dazzle investors due to the AI hype, except that it remains pricey after the stock split in June 2024.
Fortunately for Canadians, there are cheaper options on the TSX. Descartes Systems Group (TSX: DSG), Docebo (TSX: DCBO), and Exco Technologies Limited (TSX: XTC) are promising AI stocks that could deliver hefty gains like the AI king.
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Perfect extensions
Descartes benefits from the AI hype and is up nearly 20% year to date. The tech stock trades at $133.37 per share compared to US$106.21 for NVIDIA on the Nasdaq Composite. This $11.4 billion Waterloo-based firm provides cloud-based logistics and supply chain solutions.
In October 2021, Descartes unveiled its AI- and machine learning (ML)-based enhancements through the Routine, Mobile, and Telematics suite, one of seven solutions offerings. The enhancements enable customers to achieve outstanding optimization results while learning from real-world outcomes to maximize fleet performance.
Descartes takes pride in its global logistics network, which helps shippers, carriers and logistics services providers navigate an increasingly complex global trade landscape. However, Executive Vice President Ken Wood said, “AI and ML are perfect extensions to our advanced route optimization and execution capabilities.”
Wood added that Descartes uses AI and ML to improve its ability to deliver the next level of fleet performance for customers.
AI foundation and innovation
Docebo specializes in learning management systems (LMS), and its learning platform is powered by artificial intelligence with several AI features. The $1.74 billion software company aims to enhance the deployment and management of learning programs. Customers can deliver automated and personalized learning at scale.
The AI stock trades at a slight discount (-10.17% year to date), and the share price of $57.48 is a good entry owing to the vast addressable LMS market. Because of the demand for interactive and smart learning platforms, fortunebusinessinsights.com projects the market to grow from US$23.35 billion in 2024 to US$82 billion by 2032.
Its interim chief executive officer (CEO), Alessio Artuffo, said the effective use of AI continues to set Docebo apart from legacy competitors. In Q2 2024, total revenue and subscription revenue rose 22% year over year to $53.1 million and $49.8 million, respectively. Docebo incurred a net loss of $5.7 million a year ago but reported a $4.7 million profit in the three quarters ending June 30, 2024.
Enhancing productivity and efficiency
Exco Technologies seems out of place in the AI universe because it operates in the auto parts industry, but it isn’t. The $316.7 million company derives revenue from two principal business segments: Casting & Extrusion and Automotive Solutions.
In the first three quarters of fiscal 2024 (nine months ending June 30, 2024), sales and net income increased 5.1% and 28.2% year over year to $482.3 million and $21.88 million. In the third quarter (Q3) of fiscal 2024, Exco’s earnings before interest, taxes, depreciation, and amortization and EPS (earnings per share) increased for the seventh consecutive quarter.
Its president and CEO, Darren Kirk, said Exco leverages advanced engineering, AI, and ML to stay ahead of global competition and significantly enhance productivity and efficiency. At $8.20 per share (+6.98% year to date), you can partake in the 5.12% dividend.
Pay foreign withholding tax
Canadians can purchase Descartes, Docebo, and Exco Technologies shares without hassle. However, Canadian investors must only hold foreign stocks like NVDA in a Registered Retirement Savings Plan to avoid paying U.S. income tax.
