There’s no question that AI has created a tonne of opportunity for investors in tech stocks. However, like any high-growth industry, there is plenty of volatility. For example, the selloff earlier this month after several AI leaders called for slower development showed just how quickly that excitement can turn into uncertainty.
Chip stocks fell sharply, and Celestica (TSX: CLS) lost almost 9% in one day. Shopify (TSX: SHOP), meanwhile, actually gained ground.
That difference makes sense when you look at how the two companies benefit from AI. Celestica supplies equipment used to build data centres, so its growth is closely tied to how much technology companies spend on new infrastructure.
Shopify, on the other hand, helps merchants sell products, and AI could give those merchants another way to reach customers.
So, while both are some of the best Canadian growth stocks to consider buying and holding for years, a slowdown in AI development would affect them differently.
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Why Shopify is still one of the best tech stocks
Shopify has been one of the best Canadian growth stocks since going public, growing rapidly long before AI became such a major focus for investors.
Its platform is built for e-commerce growth and aims to help merchants run their businesses and sell to customers online, in stores, and through other channels.
In its latest quarter, revenue rose 34% year over year to US$3.6 billion, while Shopify generated US$654 million in free cash flow. Management expects revenue growth in the low-30% range again in the third quarter.
The reason Shopify continues to see a lot of hype during the AI trade, though, is that the new technology could create another growth opportunity on top of its existing business.
For example, Shopify has been making it easier for merchants to sell through AI-powered shopping tools, and earlier this week, it added support for AI assistants in a customer’s browser to help process a purchase through checkout, once the buyer confirms the order.
That’s intriguing because even if AI development slows, people would likely keep using the tools that already exist. Furthermore, as more shoppers use AI to find products, Shopify could help its merchants reach them there too.
With that said, though, while Shopify has significant long-term growth potential and could be less impacted by a slowdown in AI development, investors are already paying a significant premium for that potential.
Currently, Shopify trades at roughly 68 times forward earnings, and its shares actually continued to rally during the AI selloff earlier this month.
So, although it remains one of the best growth stocks Canadians can own for years, I wouldn’t call it an obvious bargain today.
Is Celestica the better stock to buy?
While Shopify is more of an e-commerce business that can leverage the power of AI to help grow sales, Celestica has a much more direct connection to AI infrastructure spending because it designs and manufactures networking and computing equipment for data-centre customers.
So, if AI development slows down and those customers start delaying projects or cutting their budgets, Celestica’s growth could slow. However, so far the demand Celestica is seeing tells a different story.
In fact, management expects revenue to reach US$20.5 billion in 2026, roughly 65% higher than last year, and revenue growth to continue accelerating in 2027.
Furthermore, in August, Celestica raised approximately US$3.5 billion by issuing new shares to help fund investments in its business. That diluted existing shareholders, but it also gave the company more capital to expand and take on the work it expects its customers to need.
And while SHOP stock has had a remarkable run recently, up more than 50% over the last year, at roughly 24 times forward earnings, it still trades at a considerably lower valuation than Shopify despite its much faster expected growth.
With that said, its results will still depend heavily on technology companies continuing to build out their data centres, and its share price could remain volatile whenever that spending is questioned.
So if you believe in the long-term potential of AI and want exposure to the growing demand for data centres, Celestica is the stock I’d buy of the two today, especially while it continues to trade at a more reasonable valuation.
