Investing in tech stocks, particularly AI stocks, is becoming quite the trend these days for stock market investors. Artificial Intelligence (AI) technology is pretty much everywhere now, making waves across every industry. Healthcare, logistics, energy, and even e-commerce segments are just some of the industries revolutionized by AI.
Amid all the buzz surrounding AI being used by companies, a few businesses are leveraging the tech to create real-world solutions to address pressing concerns. While the AI market, as a whole, is growing, plenty of opportunities exist for investors who want to capitalize on long-term growth potential.
Against this backdrop, Descartes Systems Group Inc. (TSX:DSG) is one such AI stock that might be the perfect fit for many investors bullish on AI. Trading at 18.7% below its 52-week high as of this writing, this low-flying AI stock offers plenty of reasons to make it a good investment. Let’s take a look.
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Descartes Systems Group
DSG is a $12.4 billion market capitalization company headquartered in Waterloo that provides software solutions for clients in the shipping industry. The Global Logistics Network, which is its core offering, has rapidly become the key factor for streamlining global supply chains. The platform lets clients send/receive messages, documents, and data.
DSG generates revenue by charging clients for offering these services in exchange for monthly or multi-year contracts. To make things even better, DSG offers additional software modules for additional functionality for clients based on their needs. Upselling additional software modules and offering them as a Software-as-a-Service (SaaS) model diversifies revenue streams for DSG.
Despite trading at a significant discount from its 52-week high, DSG stock is a solid business. Its AI-powered tools help businesses optimize shipping, track their deliveries, improve compliance, automate customs filings, and much more.
Recent performance
The global economic situation hasn’t been the best of late, but that hasn’t fazed DSG stock and its performance. The business is doing well, as reflected in its latest earnings. The April 2025-ending Q1 for fiscal 2026 saw the company’s revenue grow by 12% compared to the same period last year. An impressive 93% of its revenue was from its high-margin services, which contributed to most of its year-over-year growth.
Descartes Systems’ adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also rose by 12% year-over-year, and it reported a 4% net profit. While the company’s sequential growth was weighed down by seasonal softness and more expensive restructuring, it ended the quarter with plenty of liquidity and over US$176 million in cash.
Foolish takeaway
AI technology has virtually endless possibilities for its real-world applications, and DSG has found a unique way to leverage the technology to benefit its clients and the business itself, and drive shareholder value growth. The company is maximizing AI’s potential to improve its offerings.
From its Route Planner AI Advisor, helping users get the best configuration for delivery networks, to specialized AI-powered tools that help users seamlessly handle cross-border shipping logistics, it has plenty of value to offer and a massive growth runway ahead.
If you believe AI is the future, DSG stock can be an excellent holding for investors with a long-term strategy.
