Ready to Invest in Artificial Intelligence (AI)? 2 Stocks That Are Solid Bets

These two AI stocks provide investors with strong future opportunities as AI continues to become a part of our everyday life.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 May 23, 2024 9:30 pm EDT

| More on: CLSOTEX

Artificial intelligence (AI) stocks have been some of the biggest heavy hitters on the markets today. And while many of the bigger companies are certainly set to soar higher, Canadian companies are getting in on the action as well.

With that in mind, these are the two best AI stocks on the TSX today for investors to consider.

Celestica

First, let’s go over Celestica (TSX:CLS). Celestica isn’t an AI company itself, but it does benefit from the growth of AI due to its position in the tech sector. As AI technology advances, there will be a demand for more complex electronics to power it. Celestica being a Contract Electronics Manufacturer (CEM) is well-positioned to benefit from this increase in production.

Furthermore, Celestica gets higher profits from these clients compared to others. As this group of customers – including major tech companies heavily involved in AI – grows Celestica’s revenue could grow alongside the AI market.

Now it’s important of course to remember a few things. Celestica isn’t directly involved in AI development. They manufacture the hardware, not the software or the AI itself. So, their success relies on the overall tech industry, not just AI advancements. As well, it’s still in the volatile sector of tech, which while promising, certainly has its ups and downs.

Shares of Celestica stock, however, have risen 373% in the last year and are climbing, so it’s certainly worth considering among AI stocks.

OpenText

Then there’s OpenText (TSX:OTEX), again a company not related to the development of AI, but using it to further its business. OpenText isn’t just tangentially connected to AI; they’re actively incorporating it into their core business offerings. They provide software solutions for information management and are increasingly using AI for tasks.

These tasks involve several areas. For instance, AI can analyze large datasets and automate document creation or classification. It can identify potential security threats or ensure adherence to regulations. Plus, OpenText’s AI-powered chatbots can answer customer queries and improve efficiency.

What’s more, OpenText has been acquiring and partnering with AI-focused companies to expand its capabilities. This shows a commitment to staying at the forefront of AI integration. Add to this that OpenText boasts a history of profitability and consistent revenue growth. The company also predicts 15% growth in enterprise bookings over the next few years, indicating a positive outlook.

Again there are drawbacks. For instance, there is massive competition in this industry. And while AI is promising, the tech market can be volatile as mentioned. Even so, OpenText stock looks like a strong value play, with shares down 23% in the last year – all while continuing to trade at 2 times book value and offering a 3.24% dividend yield.

So this could certainly be one AI stock that investors could grab for a deal and potentially see climb to heights only seen by companies like Celestica stock. Whichever you follow, as always, make sure it falls within your risk profile for your own portfolio goals.