The Magnificent Seven tend to get all the credit when it comes to the tech rally. Indeed, the influential group of technological giants is harnessing the full power of generative artificial intelligence (AI). Of course, some have clearer AI strategies than others, but, for the most part, each name looks like a fantastic growth play that’s well-equipped to capitalize on the AI boom from different angles.
Of course, there’s ample overlap between them as they battle for AI leadership. Either way, the cohort has been hot of late, but with a somewhat lagging Canadian dollar (currently going for close to US$0.72), I do think that Canadian investors have plenty of reason to buy Canadian tech as the summer season winds down.
In this piece, I’ll highlight two TSX tech stocks that I think can keep up with the so-called Mag Seven trade. Perhaps some of the names in this list have what it takes to beat most of the Mag Seven over the next 18 months.
Source: Getty Images
Shopify
After recently slipping 3.5% on no real big news, I think Shopify (TSX:SHOP) stock is a screaming buy, especially while its latest quarterly earnings beat is still fresh on the minds of retail investors. Now just shy of $200 per share, Shopify is still up more than 103% in the past year.
That’s the kind of performance that’s made the e-commerce sensation even more magnificent than the great American Mag Seven members. Of course, the recent pace of gains is unsustainable. And while there have been huge bumps in the road, I continue to view them as terrific buying opportunities for investors who want a Canadian AI stock for a change.
With the company’s AI bets already working their way into the results (think AI-powered tools and store builder), I think it’s not all too out of the ordinary to expect sales growth to accelerate to the 30–35% range in coming quarters.
Indeed, it’ll be harder to top estimates after the latest quarterly beat, but I think most analysts are still underestimating AI’s ability to attract more merchants across the e-commerce scene. In short, Shopify is an AI-powered share taker. And its growth story is just getting started.
Celestica
Celestica (TSX:CLS) is a Canadian electronics design and manufacturing platform provider that’s also evolving into an AI growth play. The stock has been even hotter than Shopify, up 279% in the past year and more than 840% in the last two years.
Indeed, the $31.3 billion tech firm is rising up the ranks of Canada’s tech leaderboard really fast. And I think there’s more room to run as AI demand paves the way for more AI infrastructure spending. Indeed, AI is a generational tailwind that could support double-digit growth for potentially years to come.
The only knock on the stock at more than $270 per share? The valuation. Shares trade at 42.9 times trailing price-to-earnings (P/E) or 36.7 times forward P/E. If there’s a pullback after the latest parabolic surge, I’d look to initiate a position. For now, those keen on the name should nibble their way gradually into weakness. It’s an AI winner that’s crushed the Mag Seven lately, but the multiple bakes in a lot of expectation.
