Forget about the Magnificent Seven stocks for a moment. They’re big artificial intelligence (AI) winners that’ll likely come out on top as the multi-year AI ascent plays out. But I think that valuations are getting a tad ahead of themselves, especially as the seven mega-cap tech titans look to one-up each other with spending pledges and even the poaching of AI talent. Indeed, I have no idea if there’s a bubble in AI or tech.
Time will tell, as they say. But I think that the kind of activity we’ve witnessed in the tech sector may be symptomatic of a brewing bubble. Just because there are a few signs, though, doesn’t indicate severe overvaluation and the need for a painful crash. Either way, I think the tech titans have what it takes to stay agile if trends shift and capital doesn’t flow as freely to the firms that are leading the AI charge.
In this piece, we’ll look at two cheaper AI stocks that investors may wish to pick up if they’re looking to “buy Canadian” with their next AI stock purchase.
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Kinaxis
Kinaxis (TSX: KXS) is best known for its supply-chain management software solutions. The stock hasn’t been all too impressive in the past two years, rising just over 16%, trailing behind most tech stocks and the broad market. Despite the choppiness, I am a fan of Kinaxis’s growth story as it continues innovating with its Maestro platform. Indeed, AI agents could change the way we think about software as a service (SaaS) as we know it.
Though Maestro isn’t yet a powerful profit driver, I do see significant upside as Kinaxis helps its customers get up to speed with agentic AI. Indeed, 2025 was supposed to be the year of agents. But I think the biggest growth from AI agents will span the next three to five years. And over that timeframe, expect firms innovating on that front to take their growth into overdrive. Supply chain management is tricky, but AI agents may be the solution to unlocking enviable efficiencies.
Of course, it’ll take time for customers to adopt profound new technologies, but once enough firms demonstrate cost savings, I think it’ll be tough to stop the snowball from rolling. Indeed, Maestro and other agentic AI platforms may be too costly not to make use of in a few years’ time once firms embrace the technology to jolt sales and boost margins.
Descartes Systems
Descartes Systems (TSX: DSG) is another AI play in the supply chain and logistics scene. With its Descartes AI Advisor, the firm is leveraging next-generation AI tech to solve very specific use cases. Indeed, with a narrowed focus, I view Descartes as a company that’s poised to monetize AI, perhaps better than the large language model makers themselves.
Indeed, once Descartes has enough resources in place to reduce the learning curve for customers, it’ll be tough to stop adoption. In the meantime, tariffs represent a roadbump for Descartes’s customers and a large near-term unknown for the firm’s coming quarters. Over the long term, though, I see Descartes as having a robust growth narrative that could help it make great leaps in the market cap leaderboard.
The stock is in a bear market, down 20%, after its impressive multi-year rally came to a halt following some tough quarters. As the firm integrates its PackageRoute acquisition, I think DSG stock stands out as a quiet AI gem that most growth investors have yet to discover. At 46.3 times forward price-to-earnings (P/E), you’re paying a hefty price of admission, but I think it’s well worth the premium.
Personally, I’d be more inclined to buy Descartes than Kinaxis, primarily because of the smart deals it’s made in the past year, as well as the potential for a growth re-acceleration after tariffs become a thing of the past and all focus shifts to applied AI.
