Artificial intelligence (AI) is moving from the sidelines to centre stage in Canada’s tech sector. While investors race to find the next big AI winner, most overlook one of the most established players already cashing in on the trend. OpenText (TSX:OTEX) may not be new, but it has the scale, strategy, and structure to grow with AI at its core. For those looking to get in early on Canada’s AI evolution, this is the one AI stock worth considering first.
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About OpenText
OpenText has long been known for enterprise information management. But over the past year, it shifted aggressively into AI. Its new Titanium X platform and Aviator AI tools aim to infuse artificial intelligence into the daily operations of large businesses, everything from process automation to cybersecurity and analytics. Rather than build entirely new markets, OpenText is applying AI to industries and systems that already rely on its software.
Still, investors are cautious. In the third quarter of fiscal 2025, OpenText posted total revenue of US$1.3 billion. That’s a 13.3% year-over-year drop. But when adjusted for the sale of its AMC business, the decline is closer to 4.5%. Cloud revenue told a different story. It rose 1.8% year over year to US$463 million, marking 17 straight quarters of cloud growth. That’s where the AI action lives.
More importantly, OpenText continued to churn out strong cash. It generated US$402 million in operating cash flow and US$374 million in free cash flow during the quarter. That’s up 4.6% and 7.4%, respectively. It also maintained an adjusted earnings before interest, depreciation and amortization (EBITDA) margin of 31.5%. Even with revenue softness, the AI stock remained highly profitable and capital efficient.
Staying strong
From a Canadian-dollar perspective, the business pulled in close to $1.7 billion in quarterly revenue, with roughly $630 million from cloud services. It returned $94 million to shareholders through dividends and another $158 million through share repurchases. At a time when many AI-oriented stocks are unprofitable or speculative, OpenText offers something rare: tangible returns.
That doesn’t mean the path forward is smooth. The AI stock saw a dip in enterprise cloud bookings, which fell 8.4% year over year. Net income under generally accepted accounting practices (GAAP) was US$93 million, a 5.6% drop. Earnings per share (EPS) also declined slightly. These signs of a slowdown can’t be ignored. They reflect softer demand in some business areas and overall market volatility.
Still, the AI stock’s leadership is staying focused. The final phase of its Business Optimization Plan is underway, which includes workforce reductions, cost control, and reinvestments in key growth areas like AI and security. The plan is expected to generate annual savings between US$490 million and US$550 million by fiscal 2027. About half of those savings should show up by the end of fiscal 2026.
Bottom line
Long-term investors know that patience often pays. OpenText has weathered cycles before, expanded through acquisitions, and transformed itself more than once. It’s not starting from scratch with AI, it’s embedding it into platforms that are already trusted by global banks, governments, manufacturers, and hospitals.
For Canadian investors who want meaningful exposure to AI without giving up on earnings, dividends, or scale, OpenText stands out. It’s not the flashiest name on the TSX. But it’s quietly becoming one of the most important. In a market full of hype, that kind of steady evolution may be just what a smart portfolio needs.
