Artificial intelligence (AI) is gradually emerging as a transformative force with the potential to reshape economies globally, and Canada is no exception. From automating routine tasks to accelerating groundbreaking research work, AI’s impact is already being felt across industries. Bank of Canada governor Tiff Macklem recently described AI as having “all the hallmarks of a general-purpose technology,” highlighting its potential to drive productivity, influence inflation, and reshape employment. While the full impact of AI may take time, Canada is already seeing some of its effects, and this opens up some exciting opportunities for investors.
Before I highlight two top Canadian stocks that could be well-positioned to ride Canada’s AI wave, let’s take a closer look at what Macklem had to say about AI’s potential economic impact.
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Why Macklem thinks AI could transform the Canadian economy
In his recent remarks, Macklem stressed that AI has the potential to significantly boost productivity, which could help businesses across sectors operate more efficiently. By automating repetitive tasks and optimizing complex processes, AI could enable faster economic growth without triggering inflation, which is important for a stable economy.
“When labour productivity is rising, the economy can grow more quickly without causing inflation,” Macklem explained. This potential productivity boost makes AI an attractive prospect for industries ranging from finance to manufacturing.
However, Macklem also noted that the effects of AI adoption may be mixed in the short term. While productivity gains are likely, the immediate surge in demand for AI resources, including data centres, computing power, and skilled talent, could create short-term price pressures and ultimately add to inflation.
These two TSX stocks could benefit from AI’s growing presence
While Canada doesn’t have large chipmakers like those in the U.S., it does have promising tech stocks gearing to benefit from the upcoming AI boom.
The first such TSX stock that comes to my mind is BlackBerry (TSX:BB). Besides using AI technology in its enterprise cybersecurity solutions, BlackBerry is also utilizing machine learning and AI to develop advanced technological solutions for the automotive industry, which could accelerate its financial growth in the coming years. Despite its strong fundamentals and focus on AI, BB stock has seen 28% value erosion so far in 2024, making it look undervalued based on its long-term growth outlook.
Similarly, Kinaxis (TSX:KXS) is another top TSX stock that could benefit from the AI-driven transformation in the years to come. This Ottawa-based company, with a market cap of $4.4 billion, has integrated AI into its supply chain management platform to provide customers with better accuracy, efficiency, and speed. Kinaxis’s AI-powered platform, Maestro, allows its customers to optimize complex supply chain functions intuitively, enabling data-driven decisions, which also help businesses reduce costs. What makes KXS stock even more attractive for long-term investors is its approach to human-centred AI, which combines advanced machine learning with transparency. As AI continues to drive transformation in supply chain management, you may want to keep Kinaxis on your watchlist, especially given its potential to outperform the broader market by a wide margin in the long run.
