The S&P/TSX Information Technology Capped Index, which tracks the performance of the top Canadian tech stocks, has reported solid gains. It has soared nearly 38.7% in one year and delivered a staggering 141.2% return over the past five years, reflecting the sector’s growth potential and ability to create wealth.
Behind this stellar performance lies a combination of factors driving the tech industry’s rapid expansion. The deployment of artificial intelligence (AI) is accelerating at an unprecedented pace, driving shares of companies operating in this space. Simultaneously, the rise of omnichannel commerce and widespread digital transformation are reshaping how businesses operate, boosting tech companies’ revenues and stock prices.
Looking ahead, the momentum in the tech sector shows no signs of tapering off. Higher investments in AI and continued e-commerce penetration are expected to keep fueling growth. So, for investors looking to capitalize on these trends, here are my top two tech stocks to buy now. The companies have delivered stellar returns and have strong fundamentals to support future growth.
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Tech stock #1
Celestica (TSX:CLS) is one of the top tech stocks to consider now to capitalize on the AI boom. The company offers electronic manufacturing services and supply chain solutions and is witnessing solid demand led by increased investments in AI infrastructure.
Over the past year, Celestica stock has soared nearly 272%, reflecting strong momentum fueled by heightened activity in servers, storage, and networking. This growth trajectory appears sustainable as the multiyear investment cycle in AI infrastructure unfolds. Celestica is well-positioned to capture an increasing share of hyperscaler spending and will likely benefit from the broader adoption of AI technologies.
Beyond hyperscalers, the digital-native enterprises and specialized AI cloud providers ramping up infrastructure investments. These players deploy solutions for specific use cases like natural language processing, machine vision, and data analytics. Celestica’s expertise in designing advanced hardware and offering tailored solutions positions it well to capitalize on these high-margin growth opportunities.
Celestica’s expertise in manufacturing advanced hardware solutions and comprehensive services portfolio position it well to cater to the needs of this diverse set of customers. Further, the momentum in its Hardware Platform Solutions (HPS) business will likely be sustained, driven by continued demand strength for its networking switches, including accelerating ramps in its 800G programs.
Overall, Celestica will likely deliver solid revenue and expand margins in the coming years. This will likely drive its stock price higher.
Tech stock #2
Canadian investors could consider Shopify (TSX:SHOP) to capitalize on the digital shift. The company has been delivering strong financial results, with its gross merchandise volume (GMV) growth consistently surpassing 20% over the last five quarters. This steady growth is fueling higher revenues and boosting operating income, which, in turn, is positively impacting its share price.
Shopify’s integrated platform and innovative product offerings are key in driving wider adoption among merchants. In particular, its payment solutions have gained significant momentum, with a growing portion of GMV being processed through Shopify’s payment products.
The company is enhancing its platform by expanding its sales and marketing channels and strengthening partnerships with leading social media and payment platforms. These moves position it well to attract new merchants.
Looking ahead, Shopify’s broad range of solutions, increasing adoption of Shopify Payments and Shopify Capital, and expanding merchant base should continue to fuel growth. The company also has significant opportunities in offline retail and B2B channels, which will likely bolster its financial performance. International expansion is another key growth driver, as markets outside North America are growing quickly.
Further, Shopify’s use of AI to optimize operations, shift to an asset-light business model, and focus on improving operational efficiency will ensure sustainable earnings over the long term and drive its stock price.
