Forget the boom in tech stocks we saw a few years ago; there is a whole different ball game in play right now. Artificial Intelligence (AI) technology is becoming increasingly integral in all aspects of our lives. Far from merely providing the answers to all our questions via ChatGPT, AI integration is everywhere. AI stocks have been the hottest thing on the stock market for the last couple of years.
Despite a high-interest-rate environment, markets have been on a bull run. Take the S&P/TSX Composite Index, the benchmark for the Canadian stock market’s overall performance. As of this writing, the index is up by a staggering 57.4% from the start of 2023. While several factors contributed to the uptick, the AI revolution is undoubtedly part of it.
If you’re on the hunt for growth stocks that can be big winners in the next few years, AI stocks are the most likely avenue to explore as an investor. Today, I will discuss one Canadian stock that could be an excellent holding to consider against this backdrop.
Shopify
If you have been investing for a little while and were active during the tech boom, Shopify Inc. (TSX:SHOP) is not an unknown name to you. In just a few years, Shopify has become one of the biggest players in the e-commerce industry. Headquartered in Ottawa, Shopify is a Canadian multinational e-commerce company. Its platform lets merchants of all sizes build their online presence, providing everything from storefronts to fulfillment, payment, and shipping services.
Shopify’s platform changed the game for merchants breaking into the e-commerce space by making it so much easier for them to set up their online stores. The pandemic gave a boost to this space due to social distancing regulations, and the growing sector saw accelerated adoption. The success saw Shopify briefly overtake Royal Bank of Canada as the largest stock on the TSX by market cap.
AI integration
AI technology integration is everywhere, benefitting virtually every industry, especially e-commerce. Shopify has been using AI in many aspects of its business to improve operational efficiencies internally. When it comes to the products it helps merchants sell, it uses AI for critical automation. The company has even launched an AI assistant that answers users’ questions about products available via Shopify.
Its AI-powered tools, like Shopify Magic, are helping merchants on the platform sell their wares even better. The e-commerce solutions provider is empowering its clients and helping them get more business. In turn, it is making itself an increasingly attractive platform for merchants of all sizes to use.
Foolish takeaway
AI-fueled improvements and efficiencies aren’t the only reasons Shopify is an attractive investment. The fact that Shopify is an e-commerce platform that allows vendors to have their own websites, branding, checkout systems, and more differentiates Shopify from other e-commerce giants, such as Amazon.
Its innovations have encouraged other companies to offer similar solutions. However, those adopting its approach have a higher barrier to entry if they want to give Shopify meaningful competition.
Shopify’s success has been apparent, and the company’s profitability is growing. The last 12 months have seen the company’s revenue grow by 29%. Its earnings and free cash flow increased by 83% and 23%, respectively. SHOP’s financials are better than they were when it was the largest stock on the TSX by market cap. In short, it can be the big winner for AI-focused investors, and it might be the right time to add it to your holdings.
