Artificial intelligence (AI) can write an email in seconds, but making it useful inside a large company is messier. The system must find the right product, policy, or customer record without confidently serving up digital nonsense. That problem creates an opportunity beyond chips and data centres. So, where might that spending go next?
Source: Getty Images
The next step
The next phase of AI spending may move closer to the customer. Companies need software that connects language models with private data, understands what a user wants, and returns an answer that’s relevant and secure. That’s where AI can start producing revenue.
Canadian businesses are moving in that direction. Statistics Canada reported that 19.2% used AI to produce goods or deliver services in the second quarter of 2026, up from 6.1% two years earlier.
That adoption creates room for Canadian tech stocks selling enterprise AI tools, but investors must separate useful software from a fashionable demo. Subscription growth shows whether customers keep paying, gross margin reveals whether the product can scale, and cash flow determines how long the company can fund its ambitions.
A falling price can make those numbers more attractive, although “down a lot” and “cheap” aren’t synonyms. Investors should ask whether the business is deteriorating faster than its valuation or the market has simply lost patience. One Canadian AI company looks like the second case.
CVO
Coveo Solutions (TSX:CVO) provides an AI-powered relevance platform for commerce, customer service, websites, and workplace applications. Its technology helps businesses search enormous product and content libraries, personalize recommendations, and ground generative AI answers in trusted company information.
Consider an online parts supplier with thousands of similar products. A poor search result can send the customer elsewhere. Coveo stock’s software tries to understand intent, surface the right item, and improve results using behaviour and context. That gives customers a financial reason to keep paying.
The market isn’t showing much affection. At roughly $4.30, Coveo shares sit 55% below their $9.53 52-week high. The decline reflects slower-than-hoped growth, uneven timing for large enterprise contracts, and the uncomfortable fact that Coveo stock hasn’t become consistently profitable.
The underlying business, however, hasn’t fallen by anything close to 55%. Fiscal 2026 Software as a Service (SaaS) subscription revenue reached US$142.5 million, up 13%, while Coveo stock maintained a 78% gross margin. Core-platform subscription revenue grew faster as the older Qubit product was retired, suggesting the business Coveo stock wants to keep is moving in the right direction.
Why Coveo looks cheap
There’s also a current catalyst. Coveo stock reported its strongest fourth-quarter new-business bookings performance on record, with commerce producing nearly 60% of new bookings. Gartner then named Coveo a Leader in its 2026 Magic Quadrant for Search and Product Discovery, giving cautious enterprise buyers another reason to take a look.
Management appears to see a disconnect as well. Coveo stock renewed a share-repurchase program allowing it to buy up to roughly 10% of the public float. Under the previous program, it repurchased shares at an average price of $6.78, well above today’s level. Buybacks don’t guarantee a rebound, but this one could increase each remaining shareholder’s ownership.
The balance sheet makes the valuation harder to ignore. Coveo stock ended March with US$101.9 million in cash, while its market capitalization is roughly $395 million. Shares trade near 1.9 times sales before adjusting for that cash cushion.
Foolish takeaway
Still, this isn’t a sleepy blue-chip bargain. Coveo stock recorded a US$28.9 million net loss in fiscal 2026, and larger software platforms can bundle competing AI-search features into broader contracts. Delayed enterprise deals could also make quarterly growth lumpy, so this stock belongs in the speculative corner of a diversified portfolio.
Investors interested in buying stocks in Canada could begin with a small position and wait for upcoming results to confirm that bookings are becoming recurring revenue. Coveo stock doesn’t need to reclaim its old high for the investment to work. It needs to keep customers, grow subscriptions, and move steadily toward durable profit.
If that happens, today’s 55% discount could look less like a warning and more like a rare chance to buy an enterprise AI platform before its financial results catch up with the technology.
