Despite popular opinion, Canada hasn’t been left out of the AI revolution — far from it. Hear how Canadian stocks like Coveo (TSX: CVO), Kinaxis (TSX: KXS), and Shopify (TSX: SHOP) sit squarely in the middle of the boom.
Prefer to read? There’s a transcript below.
Transcript
Nick Sciple: I’m Motley Fool Canada senior analyst Nick Sciple, and this is the “Five-Minute Major,” here to make you a smarter investor in about five minutes.
Artificial intelligence isn’t just a Silicon Valley story anymore. It’s reshaping industries all over the world — and in Canada, there’s a growing group of companies putting AI to work. From enterprise software to logistics to e-commerce, Canadian AI stocks are carving out their place on the global stage. In today’s episode of “The Five-Minute Major,” we’ll look at what’s driving this trend and where investors should be paying attention.
My guest today is Motley Fool Canada Chief Investment Officer Iain Butler. Iain, thanks for joining me.
Iain Butler: Great to be here on this fine September day, Nick.
Nick: So AI is dominating headlines, but many Canadian investors may not realize how much of it is happening right at home. How is Canada actually participating in the global AI boom today?
Iain: I’m actually guilty of saying that very thing, that we’ve sort of felt left out of this boom within the Canadian market, but it’s just not true. We Canadians tend to be understated, and as you say, Nick, many of us don’t realize that Canada has actually been at the forefront of AI for decades, really.
So some of the core breakthroughs in deep learning came out of Canadian universities, and that foundation has really helped create world-class AI research hubs right here at home.
Today, that’s left us with over a thousand AI startups that are based in Canada. That’s according to the Vector Institute.
And the ground zero for this is actually Montreal. It’s where a real uprising has occurred, and Montreal serves as a home to the largest concentration of deep-learning researchers in the world. So, while many of us, we Canadians, might be in the dark on this proliferation, global tech giants sure aren’t. Google, Meta (formerly Facebook), Microsoft, and others all run major AI labs here in Canada, to the point that Toronto was one of the very first places Google’s DeepMind expanded outside the UK.
Surprisingly, even our politicians have gotten on the right side of this trend as well. So Canada actually launched the world’s first national AI strategy back in 2017, with hundreds of millions of dollars in federal funding to grow local talent and keep that research leadership.
And there’s a commercial payoff to this. We’ve got some actual companies, living and breathing companies that we can invest in, along these lines. Companies like Coveo, Kinaxis, and Shopify are all weaving AI directly into their products.
I’ve said a lot here. Let’s quick summarize: We are not a bystander. Canada is not just a bystander in this movement. We’re an early innovator, global talent hub, and increasingly a place where investors can find homegrown AI opportunities.
Nick: So, Iain, you mentioned a few publicly traded companies in that spiel. What are some AI opportunities available to Canadians on the public markets that should be on investors’ radar?
Iain: It was a spiel, you’re right! So those three companies, Coveo, Kinaxis, and Shopify are current recommendations in Stock Advisor Canada, which is our flagship members-only stock-picking service here at Motley Fool Canada. So starting with Coveo, a Quebec-based company, it’s in the business of using AI to make digital experiences smarter. Think about search bars on company websites, product recommendations, and even customer support. So they’re really in the business of monetizing AI for their customers, and that client list includes some powerhouses like Salesforce, SAP, and Adobe, which makes it a pretty compelling situation just on its own.
That’s Coveo.
Kinaxis is Ottawa-based. The company offers software that helps its customers with supply-chain management. I think if the pandemic taught us anything, it’s that supply-chain management is pretty darn important to get right. AI is baked into Kinaxis’s software offering. It serves as the backbone of the tools that it provides to its customers.
And these tools largely are capable of simulating just thousands of different what-if scenarios. What if part A doesn’t arrive? What if part B doesn’t arrive? How do we rectify that situation? So, Kinaxis has been a long-time recommendation of our service, and it’s performed very, very well, and it’s been fascinating to see it evolve over the years.
And then finally, speaking of long-term recommendations, we first put Shopify in front of our Canadian members way back, just after its IPO in 2016.
It’s done alright. Of the three, I suspect — and I kind of hope — that Shopify needs the least in terms of an introduction, but even though it’s the second-biggest company in Canada by market capitalization, I still don’t think a lot of Canadians know of it. So, Shopify is a platform where e-commerce occurs. Companies can put their business onto the Internet, with the help of Shopify, and use it to sell their wares.
We’re gonna run a little bit over time, but who cares?
Shopify has built this platform out with a variety of tools over the years. These are increasingly AI-oriented. Businesses on the platform, once they get on the platform, start using these tools, they can’t leave, otherwise their business goes away. So Shopify’s got one of the stickier business models that you’re ever going to find, and it’s been a glorious company to watch, and a glorious investment for our members and a lot of Canadians.
Nick: Yeah, Iain, so AI is one of the defining trends of this decade, the 2020s, and there are Canadian companies right in the mix, whether it’s lesser-known names like Coveo or Kinaxis, or the big dog in the TSX, Shopify, there are homegrown Canadian stocks building, enabling, and benefiting from AI that are available to invest on the public markets and that we talk about for our members at Motley Fool Canada. That’s all the time we have for today’s edition of “The Five-Minute Major. Thank you for joining us, and we hope to see you again next time.
