As artificial intelligence (AI) continues to show potential to transform how we live and work, the growth opportunities in the AI sector are becoming increasingly clear. While many big-name tech companies, especially in the U.S. market, have already seen their valuations soar due to the AI boom, some lesser-known players on the Toronto Stock Exchange are quietly building their presence in this space, showing potential to deliver massive returns in the long run.
One such hidden gem in Canada is BlackBerry (TSX:BB). After dominating the smartphone market less than two decades ago, BlackBerry has seen a big transformation in the last several years by shifting its focus to enterprise software, including cybersecurity and Internet of Things (IoT) solutions.
In this article, I’ll talk about why BlackBerry’s strategic pivot toward AI and enterprise solutions could position it as an excellent growth stock that’s still undervalued in today’s market. Let’s take a closer look.
BlackBerry’s use of AI technology in cybersecurity
Well before OpenAI’s ChatGPT launch in late 2022, BlackBerry had already started leveraging AI technology to redefine its offerings in cybersecurity and IoT segments. The company’s acquisition of Cylance in 2018 played a key role in this transformation. Cylance brought advanced AI and machine learning capabilities to BlackBerry’s portfolio, enabling its software to predict and prevent cybersecurity threats proactively. This marked its departure from traditional reactive cybersecurity measures and boosted the position of this Waterloo-based firm in the predictive security technology space.
In this segment, BlackBerry has integrated AI into products like CylanceENDPOINT and CylanceMDR Pro. These tools utilize behavioural and sensor-based analytics to detect even the most elusive cybersecurity threats.
Its IoT solutions are also using AI and machine learning
Besides cybersecurity, BlackBerry has also been embracing AI to make its IoT solutions portfolio more appealing. For example, its Spark platform, which focuses on securing connected devices, leverages the company’s expertise in AI to provide strong endpoint protection. By integrating lightweight, efficient AI technology, BlackBerry is striving to make it easier for companies across industries to adopt IoT solutions without compromising on security or performance.
Today, BlackBerry’s intelligent vehicle data platform, called IVY, also uses AI and machine learning to process vehicle data in real time. The platform allows automakers to use smarter insights for predictive vehicle maintenance, personalized driving experiences, and improved safety measures.
This AI stock is screaming buy now
Despite BlackBerry’s increased efforts to integrate AI and machine learning, its stock hasn’t seen any appreciation in recent years. In fact, the stock has lost over 70% of its value over the last three years to currently trade at $3.63 per share with a market cap of $2.2 billion.
Despite BlackBerry stock’s struggle, BlackBerry’s financials are gradually improving. In its latest quarter ended in August 2024, it reached an important milestone by achieving breakeven adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) and adjusted earnings per share.
The company now expects its full-year fiscal 2025 (which will end in February 2025) adjusted EBITDA to range between breakeven and a positive $10 million, reflecting the management’s confidence in its ongoing cost optimization and revenue growth efforts.
Moreover, as the demand for its AI-powered cybersecurity and IoT solutions surges further, BlackBerry’s financials could grow exponentially in the coming years, making its stock look way too undervalued right now.
