Investing in artificial intelligence (AI) stocks has become increasingly popular. Yet for Canadian investors looking for a stable, long-term opportunity, OpenText (TSX:OTEX) is an overlooked gem. While many AI-focused companies attract attention with their flashy innovations and speculative growth, OpenText has been steadily integrating AI into its enterprise software solutions, thus making it a reliable choice for those seeking long-term gains.
Early adoption
One of the key reasons OpenText stands out is its strategic approach to AI adoption. The AI stock’s upcoming Titanium X platform is expected to be a game-changer, integrating AI, cloud, and security into a seamless enterprise solution. With more businesses transitioning to multi-cloud environments, OpenText is positioning itself as a leader in helping organizations navigate this transformation. By providing AI-driven insights and automation, OpenText is making companies more resilient and efficient, reinforcing its long-term value as an investment.
Financially, OpenText has demonstrated resilience despite market fluctuations. In its latest earnings report for the second quarter of fiscal 2025, the AI stock reported $1.3 billion in revenue. While this represented a decline from the previous year due to the divestiture of its Application Modernization and Connectivity division, cloud revenues grew by 2.7% year-over-year. More importantly, the AI stock’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin stood at a solid 37.6%, reflecting strong profitability.
OpenText also posted a remarkable 510% increase in net income year-over-year, underscoring the effectiveness of its focus on efficiency and cash flow generation. This ability to maintain profitability while investing in AI and cloud expansion sets OpenText apart from more speculative tech stocks.
Shareholders top of mind
One of the most appealing aspects of OpenText as an AI investment is its commitment to returning value to shareholders. Unlike many high-growth AI stocks that reinvest all earnings into expansion, OpenText offers a dividend, thus making it an attractive option for investors who want exposure to AI without sacrificing passive income. The AI stock recently declared a quarterly dividend of $0.2625 per share, continuing its long-standing practice of rewarding shareholders. This makes OpenText one of the few AI-related stocks that provide a blend of both growth potential and income stability.
In addition to its strong fundamentals, OpenText has a proven track record of strategic acquisitions that have expanded its AI capabilities. The acquisition of Micro Focus, for instance, significantly strengthened its AI-driven data analytics and cloud offerings. With Titanium X set to launch later this year, OpenText is reinforcing its leadership in AI-powered enterprise software, thusly ensuring that it remains relevant as companies increasingly rely on AI for automation and data-driven decision-making.
Investing in stability
When compared to other Canadian AI stocks, OpenText offers a much more stable and predictable investment. Other AI stocks have AI-driven elements, but tend to come with higher valuations and greater volatility. OpenText, by contrast, trades at a forward price-to-earnings (P/E) ratio of 8, making it a relatively undervalued opportunity in the AI space. Its strong recurring revenue base, which accounts for nearly 80% of total sales, ensures that OpenText maintains predictable cash flow, even in challenging economic conditions. This defensive characteristic makes it a compelling choice for investors who want exposure to AI without the dramatic price swings seen in more speculative stocks.
Looking ahead, OpenText’s growth potential remains strong. Its enterprise cloud bookings increased by 6.1% year-over-year, reflecting growing demand for AI-powered solutions. As businesses continue to prioritize AI-driven automation and analytics, OpenText is well-positioned to capture a larger share of the market. With a focus on operational efficiency and disciplined capital allocation, the AI stock has the financial flexibility to continue investing in AI advancements. All while maintaining profitability.
Bottom line
OpenText may not be the most exciting AI stock on the market, but it is one of the most reliable. Its combination of consistent earnings, strong free cash flow, a growing AI presence, and a shareholder-friendly dividend policy make it a compelling long-term investment. For those looking to capitalize on the AI revolution without taking on excessive risk, OpenText presents an attractive opportunity that balances innovation with financial stability.
