After a bit of an AI-driven market pullback, beginner investors may wish to start thinking about which kind of AI names make sense to buy ahead of a potential continued recovery. Of course, last week’s painful selling may have set the stage for a smoother path forward for some of the formerly overheated AI-driven technological innovators.
While there’s plenty of skepticism as to whether the big money will also result in a big return (or a satisfactory one, at least the very least), I think there’s room for DIY stock pickers to pick and choose among the names that have a good spot in the AI race, one that has several Canadian contenders in it as well.
And while Canadian investors can’t yet get a piece of AI startup Cohere until it has its IPO (initial public offering), hopefully in 2026 or perhaps a while longer, I still think there are other intriguing firms that stand to benefit a great deal from the fast-moving technology.
And in this piece, we’ll look at a name that I think is a standout AI play that might be ready for a bit of buying on the dip as we move into the month of December. Hopes for a Santa Claus rally begin to march higher as we look to consumer spending and perhaps yet another interest rate cut south of the border.
Given recent commentary, the odds of a Fed rate cut in December are higher than a coin toss. Either way, the benefits could carry over into the Canadian names, especially those with plenty of AI growth in the tank.
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Celestica
Celestica (TSX:CLS) has to be one of the biggest Canadian AI winners in the past two years, with shares now up a whopping 1,133% over the timespan. After a huge 15% relief rally on Monday, I think there’s a good chance that new highs are ahead for the firm that’s seen explosive growth in its high-performance solutions.
With one of the best quarters under its belt and the potential for AI spending among the heavyweights to accelerate further, I believe that any strength in the hyperscalers bodes very well for Celestica, especially as its innovations continue to win meaningful business from the biggest and brightest in big tech south of the border. Personally, I think the partnerships with the biggest players in tech are a source of an economic moat.
Some may have serious valuation concerns with shares of CLS. However, I think the 52.5 times trailing price-to-earnings (P/E) multiple isn’t all too obscene considering the growth rate and potential for a further acceleration in 2026. However, there is considerable valuation risk here, especially if AI bubble fears return for Wall and Bay Street. Undoubtedly, the once lesser-known Canadian tech firm is now a household name, but don’t sleep on the firm if you’re looking for AI momentum and are willing to ride out any dips on the road higher.
In a number of prior pieces, I praised Celestica as a top mid-cap to own. Back in September, I stated that Celestica was a top way to get started with “AI investing on the cheap,” forecasting that the firm is likely to deliver more quarterly blowouts and the seemingly high multiple wasn’t too lofty. In any case, I’m still a believer in the firm and see no reason to change my tune anytime soon.
