When it comes to artificial intelligence (AI) stocks, many investors might think of start-ups and risky meme stocks. However, there’s one Canadian darling that’s been in the industry indirectly, and now directly, for decades. Yes, decades.
That’s OpenText (TSX:OTEX), an AI stock that’s moving quickly into the future. Yet its share price still provides investors with a strong opportunity for huge gains. So, let’s look at what’s coming for this AI winner.
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What’s happening?
OpenText, as mentioned, is making a huge push into AI beyond its cloud services. The company created huge growth potential after collaborating with HPE in AI solutions recently, as well as delivering scalable AI technologies through its Titanium X program.
These programs help enhance data intelligence and help decision-making for enterprise companies. Bottom line: it makes the lives of business employees easier. It positions companies to perform better, and thus allows OpenText to attract more business — especially within the next decade.
Into earnings
This was demonstrated recently during its latest round of earnings. OpenText reported its fiscal year, seeing cloud revenue rise 2%, with resilience in strategic areas. This helped mitigate some of its revenue, which declined by 10.4% due to a decrease in customer support revenues after some divestitures.
However, this helps support the company’s growth in the cloud segment, which saw a huge 32% increase in cloud bookings for the quarter. That was driven by new client acquisitions, as well as more demand for its AI-driven cloud solutions.
Looking ahead
Furthermore, there’s even more ahead for this AI stock. The company’s partnership with HPE aligns with its expanding global AI market. It provides a critical advantage for deploying AI solutions, helping to transform client operations while also maintaining data security and compliance. Oh, and did I mention that amongst all this, investors also get a dividend, which was recently increased by 5% with a 64% payout ratio? In fact, a $7,000 investment in this AI stock today could bring in annual income of about $233, dished out quarterly.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| OTEX | $45.32 | 154 | $1.51 | $232.54 | Quarterly | $6,978.28 |
To support all this growth and movement, there have been some leadership changes. James McGourlay will be the interim CEO to reinforce the strategy execution and grow in its core areas of AI and cloud services. So, while earnings might be mixed, in the long term, there is certainly a lot to look forward to. And management thinks so, too; they’ve bought back $300 million in shares.
Bottom line
Right now, OpenText is one AI stock that offers a huge opportunity. The company is moving into the future at a stable clip, with major growth prospects along with income. While investors will need to continue watching restructuring efforts and leadership changes, its partnerships and movements all seem well supported. Meanwhile, you’ll receive a decent dividend of $1.51 per share each year, one that looks as though it will keep rising. All in all, long-term investors are quite likely to see their patience pay off.
