Canadian tech stocks had a great start to the year. The S&P/TSX Capped Information Technology Index, the benchmark index for the IT sector in the Canadian stock market, climbed by almost 10% between January 2 and February 4, 2025.
The IT sector outperformed the broader stock market, with the S&P/TSX Composite Index climbing by only 1.53% in the same period. Since then, the broader market and the IT sector seem to be struggling to get a foothold. The market is volatile due to macroeconomic uncertainty brought on by trade tensions between the U.S. and Canada.
Investing in the tech sector in times like this can be considered a high-risk strategy. Volatile market conditions see plenty of high-flying tech stocks decline to more reasonable levels. However, not every tech stock with falling share prices is coming down to fair valuations. In some instances, high-quality tech stocks with plenty of growth potential become bargains for long-term investors.
Against this backdrop, here are two Canadian tech stocks that you should have on your radar right now.
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Celestica
Celestica (TSX:CLS) is a $13.71 billion market capitalization Canadian-American multinational company that offers supply chain solutions. The company has two primary segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). It is perhaps one of the top IT stocks to consider because of the growing artificial intelligence (AI) market.
The company provides cloud and connectivity solutions enhanced by AI technology. There is a high demand for the design, manufacturing, and supply chain services it offers, serving several industries. In the fourth quarter (Q4) of fiscal 2024, the company reported a 19% year-over-year increase in sales and a 44% increase in earnings per share (EPS).
Backed by solid fundamentals and strong future demand, Celestica stock is well-positioned to deliver substantial returns to its investors.
Coveo Solutions
Coveo Solutions (TSX:CVO) is a small-cap Canadian tech stock with a $512.70 million market capitalization that does not come close to the size of Celestica stock. Despite being smaller, it is an important company to consider investing in for anyone bullish on AI stocks. The company effectively provides an AI-powered platform that offers applied AI solutions for enterprises. It helps companies deliver the right digital experiences on a massive scale.
Coveo uses its platform to reduce customer support costs, increase customer satisfaction, improve website engagement, improve employee satisfaction, and drive revenue growth for its customers. Plenty of large enterprises are adopting its Search & AI-Relevance platform. Its success is visible in its Q3 fiscal 2025 report. The company’s year-over-year revenue grew by 8%.
The company’s management believes this is the year when enterprises are moving past experimentation with AI solutions and focusing on properly adopting it. This inflection point might be the perfect opportunity to add its shares to your self-directed portfolio before the stock becomes massive.
Foolish takeaway
Identifying fundamentally strong companies that can make up for the losses and deliver outsized gains can help you make the most of the situation. If you have a higher risk tolerance and want to take advantage of market volatility to capture significant capital gains, CLS stock and CVO stock can be good additions to your self-directed portfolio.
