The S&P/TSX Information Technology Capped Index, a proxy for Canada’s top tech stocks, has delivered solid gains. It has soared nearly 41% year to date and delivered a staggering 149% return over the past five years, reflecting the sector’s growth potential and ability to create wealth.
The growing adoption of artificial intelligence (AI), increasing e-commerce penetration, and ongoing digital transformation are key catalysts. These trends reshape industries and create significant growth opportunities for Canadian tech firms.
For investors looking to capitalize on this momentum, here are my top two Canadian tech stocks to buy now. The companies have strong fundamentals and promising growth potential that could help you achieve above-average returns.
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Tech stock #1
Shopify (TSX:SHOP) is a top tech stock that is benefitting from ongoing digital transformation. The omnichannel commerce platform provider has been consistently delivering solid financials. Shopify’s gross merchandise volume (GMV) growth exceeded 20% in the past five consecutive quarters. Revenue surged by 26% in the third quarter (Q3) of 2024, operating income more than doubled from last year, and the company’s free cash flow margin expanded to an impressive 19%.
These numbers highlight Shopify’s ability to balance growth and profitability, strengthening its competitive positioning in the e-commerce sector. Shopify’s innovative products are playing a crucial role in its growth. Its payment solutions have gained significant traction, with penetration reaching 62% in Q3. Shop Pay, its flagship payment service, facilitated $17 billion in GMV, a remarkable 42% year-over-year increase, demonstrating the strength and appeal of Shopify’s integrated ecosystem.
Beyond payments, Shopify continues to enhance its platform by expanding sales and marketing channels. For instance, its integration with YouTube Shopping’s affiliate program and an extended partnership with PayPal showcase Shopify’s commitment to diversifying its offerings and reaching new merchant and customer segments.
Looking ahead, Shopify’s comprehensive solutions, including Shopify Payments and Shopify Capital, are poised to drive further growth in its merchant base, GMV, and gross payment volume (GPV). Its point-of-sale (POS) system is gaining momentum, benefiting from increased adoption in offline retail and B2B channels. International expansion of payment solutions and broader product offerings also present significant growth opportunities.
Shopify is also leveraging artificial intelligence (AI) to enhance its platform and optimize operations. Further, its shift to an asset-light business model positions Shopify for sustainable earnings growth and will support its share price.
Tech stock #2
Celestica (TSX:CLS) is a top TSX tech stock to capitalize on the fast-growing AI market. The company offers supply chain and hardware platform solutions and electronic manufacturing services. Moreover, it is benefitting from higher investment in AI infrastructure.
Its stock is up over 233% year to date and gained about 1,177% in the last five years, reflecting stellar demand for its Hardware Platform Solutions (HPS). The momentum in Celestica’s HPS segment shows no signs of slowing, as surging investments in data centres—encompassing servers, networking equipment, and storage—are expected to sustain the need for Celestica’s offerings.
Celestica’s Connectivity & Cloud Solutions segment, which focuses on products such as next-generation storage, servers, and communications hardware, is likely to witness solid growth. Demand for networking switches, particularly the advanced 400G and 800G models, is boosting the company’s financial performance. Moreover, the server business is poised to gain from the growing demand for high-performance computing platforms. Meanwhile, AI data centre buildouts will likely fuel demand for its storage solutions.
Moreover, Celestica will also likely benefit from higher commercial air travel and increased defence spending. In summary, Celestica is likely to benefit from AI-driven tailwinds and strength in its Aerospace and Defence division.
