The whole artificial intelligence (AI) boom created an uproar among tech stocks. AI became the buzzword, and several software companies rushed to somehow incorporate AI into their model over FOMO (fear of missing out). While it is true that AI holds immense potential, businesses have to look at AI and ask one question, How can we monetize it? This whole frenzy of putting money in AI without thinking it through is creating a bubble similar to the dot.com bubble.
Source: Getty Images
Drawing a comparison between the internet and the AI revolution
In the late 1990s, the internet was a revolution. Companies sprung up everywhere, calling themselves internet businesses without knowing how to monetize their potential. The sheer volume of such companies and the investors’ FOMO caused the internet bubble. If you are worried that we are living in an AI bubble, it could be true, as many pure-play AI companies have yet to show material monetary benefits to justify their lofty valuations.
The fact that AI is at the stage the internet was back in 1999 gives you a reason to invest in this new revolution now. The internet boom made personal computers more useful and Intel the PC chip leader. AI has made Nvidia the data centre computing leader. But you know, the biggest beneficiary of the internet was not Intel but social media, search engines, and e-commerce companies that arose from the internet.
The AI revolution has only touched the hardware. The application opportunity is yet to be tapped. It could create a whole new industry. Till we find that industry, you could consider investing in Canadian technology stocks that are using AI to say relevant.
Now is the time to invest in Canadian AI stocks
If you search for pure-play AI stocks, there are not many companies with strong fundamentals. You can find companies like Coveo Solutions built out of generative AI. However, it is too early to invest in such stocks. Instead, you could consider investing in more mature tech companies that have shown prowess in monetizing new technology efficiently.
Shopify
Shopify (TSX: SHOP) is an e-commerce company that has successfully built its model and thrived in a market dominated by Amazon and Alibaba. Shopify maintained its niche of providing small and medium-sized retailers a digital marketplace. The platform subscription and merchant services cost is cheaper than renting a shop downtown. There was nothing new about e-commerce, but Shopify’s implementation made it unique.
The company has always been enthusiastic about new technologies and is now testing AI in various applications. Its Shopify Magic tools will help customers use AI to write product descriptions, beautify the product image background, help solve customer queries via chatbots, and carry out more targeted affiliate marketing. It could test artificial intelligence in other aspects to enhance the overall shopping experience.
At present, artificial intelligence is just in the test phase. If Shopify can harness its true potential, the company could reshape the e-commerce experience and grab the attention of Gen Z and Gen X. Shopify has the potential to make money from it.
Hive Digital Technologies
Hive Digital Technologies (TSXV:HIVE) does not come out as an AI company. However, its high-performance data centre provides the infrastructure needed for AI computing. Once artificial intelligence gathers momentum, GPU (graphic processing unit)-powered data centres will become a necessity. And when that happens, the stock could make a vertical jump. Hive is offering its computing speed on a rental basis for developers who want to perform high-performance computing tasks. This segment is growing fast but is still not big enough to make a difference in the stock price. So buy the stock before the cloud business becomes big.
If not AI
While the above two stocks can grow and benefit from AI, their growth is not dependent on it. Shopify is moving steadily in the e-commerce space and Hive is in the crypto-mining space. With the business doing fine as usual , it can keep your investment growing. If the AI card materializes, your investments can get a boost.
