This Canadian Tech Company Could Be the Next AI Breakout

TELUS is quietly shifting from a telecom to an AI and digital-infrastructure player, using its scale, fibre network, and cash flow to commercialize AI services.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 23, 2025 9:00 pm EDT

When you’re looking for a Canadian tech company that could become the next AI breakout, the goal isn’t to chase hype, but to find early proof of durable, scalable innovation. Canada’s tech landscape has deep research roots and strong engineering talent, but only a handful of firms will truly commercialize artificial intelligence (AI) in a way that transforms revenue, margins, and global positioning. So before we get into one tech stock that provides a strong case, let’s look at what to consider.

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies — Source: Getty Images

What to watch

Start with real-world use cases. Many small tech firms claim to be “AI-powered,” but the ones that stand out are solving expensive, industry-wide problems. That might mean automating logistics, improving healthcare diagnostics, or optimizing financial data. Next, look for recurring revenue models. A company that earns a steady flow of subscription or contract income can fund research and development through economic cycles. Software-as-a-Service (SaaS) or data-licensing models create that steady foundation. High recurring revenue also signals strong client retention, a crucial sign that the company’s AI tools provide real value.

A true breakout prospect will also show scalable infrastructure. That means the tech isn’t just building one-off AI projects, but has a data pipeline, proprietary algorithms, or cloud architecture that can expand profitably as demand grows.

Financial health matters, too. A tech burning through cash in the name of AI can look exciting but fail before reaching profitability. Ideally, you want a company with positive or near-positive free cash flow that’s reinvesting strategically in AI. Finally, think about valuation and timing. AI optimism can drive prices far beyond fundamentals. Buying a solid company at a reasonable valuation gives room for the story to play out.

Consider TELUS

With all that taken into consideration, TELUS (TSX: T) could certainly be the next Canadian tech stock to surge from AI. Although traditionally known as a telecom company, TELUS has been actively evolving into a technology-and-AI play. Through its subsidiary TELUS Digital, it offers end-to-end data and AI services. This includes generative AI, agentic automation, model fine-tuning, multimodal data annotation, validation, and enterprise deployments.

Furthermore, TELUS is building a pronounced infrastructure advantage. The tech stock is launching what it calls a “Sovereign AI Factory” using its PureFibre network, data centres powered by 99 % renewable energy, and internal AI platforms. Internally, TELUS has the platform Fuel iX, which the tech stock uses to improve productivity and is now beginning to commercialize.

All this is in addition to its role as a classic telecom. Furthermore, it has growth on its side from TELUS Health as well. Meanwhile, unlike small tech stocks, TELUS can afford to pay dividends, offering a 7.6% dividend yield. Plus, management announced a dividend growth policy targeting 3% to 8% annual growth between 2026 and 2028.

But the best part here is that many Canadian tech stocks and AI plays struggle because they’re niche or early-stage. TELUS combines large scale with a credible pivot into AI-infrastructure and services. That gives it both a base business and an emerging growth engine. As AI demand grows, TELUS is positioned to capture more value.

Foolish takeaway

TELUS checks many of the boxes you’d want in a Canadian company that could become an AI breakout. It offers scale, infrastructure, emerging AI capabilities, credible direction, healthy cash flow and dividend yield. If the AI pivot accelerates, the tech stock could move beyond being “just a telecom” to a meaningful technology player.