Many investors are looking for the best artificial intelligence (AI) stocks right now, and Canadian investors are no exception. The problem is that unlike our neighbours to the south, where many major AI ventures are taking place, Canada only has a modest collection of AI stocks. But there are still many promising prospects here, and right now, POET Technologies (TSXV:PTK) appears to be one of the top stocks in this category.
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A promising technology
One thing you need to understand about POET Technologies is that it’s not a software-oriented AI company like OpenAI but rather a hardware company. It’s difficult to draw parallels between POET and a semiconductor giant like Nvidia, which is currently thriving in the AI boom because it makes computing hardware (graphics processing unit, or GPU) necessary to train and sustain AI models.
POET does something different but also similar. It’s not a semiconductor company, but it makes optical interposers that allow data communication in the form of light.
This has significant implications in AI because data travelling in the form of light doesn’t have the same limitations as data travelling through conventional means. If applied correctly, this can revolutionize the underlying hardware needs of AI, making them more efficient and less energy-intensive.
It’s working with another major startup to develop this technology further for AI. It is already recognized (via multiple awards) as a leader in the overlapping field of photonics and AI.
A powerful investment
Just as the company is being recognized in its own domain, it’s also getting on the radar of investors seeking cutting-edge AI technologies. As a result, the stock climbed a massive 460% this year alone. The growth wasn’t linear, but it was nevertheless substantial. A single breakthrough can push the stock to impressive heights.
Despite its decisive climb, the stock is trading at a modest price of $7.1 per share. It recently graduated from being a penny stock, which is one of the reasons it’s one of the best stocks to stash $500.
Considering the stock maintains its current pace, you can expect 10X growth in the next three years. This would be enough to convert your $500 capital to $5,000 or even more if the stock outperforms these expectations.
Foolish takeaway
One slightly worrying fact about the stock is that it might be trading a little ahead of its target price, as per some analysts. The price-to-book ratio is also quite high, even by tech stocks‘ standards. But on the plus side, its financials look pretty healthy.
There is virtually no debt and a sizable amount of cash at its disposal. This financial moat significantly reduces the risk of the company experiencing significant financial trouble, at least in the next few years.
