The artificial intelligence (AI) boom is worth investing in if you’re a young TFSA investor who’s looking to build transformative wealth. And while the potentially revolutionary secular growth theme could pick up the pace once agents, robotics, and all the sort (and even artificial general intelligence (or AGI) as more firms prepare for it) transform the way we all live and work, investors shouldn’t expect the road higher to be any less bumpy.
Indeed, corrections, pullbacks, and crashes can and probably will happen when too many euphoric investors flood into a given name. Indeed, the broad tech sector is still recovering from a first-half correction. If you’re looking to invest for the long haul, I’d say get used to such corrections and have plenty of dry powder on the sidelines to buy the dip. Of course, not every pullback is going to enjoy a V-shaped rebound.
We’re sure to witness all sorts of shapes. In any case, the key point for Canadian AI investors is to be cautious when the AI trade gets a tad overheated in the near term. We can have scenarios whereby a certain stock or theme is overhyped and overvalued in the short term, but actually undervalued and underestimated over the long haul (think 10–20 years). For young TFSA investors, the key takeaway is to play the long game and not let any near-term volatility get you down. Also, a strong stomach would always help. In this piece, we’ll check in on two AI companies that are cheap.
Apple
Apple (NASDAQ:AAPL) stock can’t catch a break this year as it deals with uncertainties from Trump tariffs and an AI plan that’s seemingly a few years behind the pack. In any case, I think it’s an absolute mistake to discount Apple’s late entry into the AI game. Arguably, the company is not late. It’s just raising the bar to a level that I think could eventually become the industry standard.
In an era of AI hallucinations and all the sort, the quality factor is, by far, the most important. What good is a “thinking” (or reasoning) model if it’s going to use up all that energy just to spit out a less-than-stellar, or worse, a poor, inaccurate result? Either way, I’m sticking with Apple. It’s an AI bargain as far as I’m concerned, and it probably won’t be stuck in the penalty box for too long a duration.
Adobe
Adobe (NASDAQ:ADBE) is a creativity software innovator that’s at high risk of disruption as AI models aim to create beautiful images and videos with just a short prompt. Why stay subscribed to Adobe’s service when you could just use Dall-E or some other sophisticated AI image generator or editor?
Though Firefly is an interesting model, I think many investors are severely underestimating it, even writing it off as it makes its mark on the creative AI scene. If there’s a tailored model that’s attached to an already powerful platform, I believe the economic moat could prove more resilient than others may realize. Either way, don’t count this horse out of the AI race just yet, as it’s just getting started. With a “computational photography” app now available, it’ll be interesting to see how the creative AI landscape shifts in 2025 and 2026.
At around 24.2 times trailing price-to-earnings (P/E), shares of ADBE look to be entering deep value territory.
