For over a year, there has been a lot of buzz around artificial intelligence (AI) technology and AI stocks. With AI becoming integrated into all aspects of our lives, this will only be a growing trend in the market for the next decade and beyond. While the tech bubble a few years ago might have popped, the growing popularity of AI integration looks as though it will only grow bigger.
There is anticipation that the AI market will soar past US$1.6 trillion by the end of this decade. The expected rise of the sector reflects an impressive 33.7% compound annual growth rate (CAGR) in just seven years.
It is not just the future of AI by the end of the decade that should excite investors. Several companies are actively using AI for their benefit. In turn, the stock of the underlying companies is being set to drive significant growth for investors.
AI-integrated systems for use at home will continue to be crucial. That said, companies leveraging its power can enact significant operational improvements to grow shareholder value and offer better returns. Today, I will discuss two Canadian AI stocks delivering on that front that you can consider adding to your holdings to capture the immense wealth growth potential in your portfolio.
Kinaxis
Kinaxis (TSX:KXS) is a cloud-based supply-chain management and sales and operation planning software company headquartered in Ottawa. Through the use of tech-based innovations, it has been providing top-notch solutions to the supply-chain space for some time, and it is no stranger to AI integration to improve its offerings.
The RapidResponse system by Kinaxis uses AI technology to forecast demand, optimize inventory, and improve transportation planning.
The last few years have seen its share prices fall after the tech bubble popped. As of this writing, it trades for $146.00 per share, down by 36.27% from its November 2021 all-time high. With growing subscription-based revenue and a well-established position as a leader in the supply-chain management space, its future-ready AI-powered software puts it in pole position to drive significant growth in the coming years.
Open Text
Open Text (TSX:OTEX) is a $13.83 billion market capitalization Canadian software company that develops and sells enterprise information management software. Like Kinaxis, it has been using AI for a few years now.
However, the company recently announced that it will double down on its AI-powered initiatives to continue innovating and driving more growth. The company’s Open Text World event saw it announce that it will expand AI to multiple new sectors, from chat spaces to engineering.
It has already been using AI-enabled solutions to improve customer experience, enhance security, and bolster content analytics. Its AI-based engineering software solution is already up and running. As several more of its AI vectors hit the ground running, it will grow its subscription-based revenue by diversifying its client portfolio across several more industries and driving growth.
As of this writing, Open Text stock trades for $50.83 per share. Down by 26.04% from its August 2021 all-time high, it can be an excellent time to pick up its shares at a significant discount.
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Foolish takeaway
The recent rise of AI technology is being touted as the next big thing since the Industrial Revolution. With the potential to create significant improvements across all sectors of the economy, the buzz around AI stocks is not surprising.
If you have a well-balanced portfolio and want to inject some growth into it, allocating some of your savings to well-picked AI stocks can be an excellent way forward. To this end, Kinaxis stock and Open Text stock warrant being on your radar if not in your self-directed investment portfolio.
