St. Patrick's Day Sale
There is a lot of variety when it comes to tech stocks in Canada, even though it’s nowhere near as much as in the U.S., where most of the tech giants of the world are concentrated. There are a handful of artificial intelligence (AI) stocks and even a few companies working on robotics.
Technically, both are the cutting edge of research and technology, but currently, AI is overshadowing every other cutting-edge technology and its stocks.
So, if you are wondering if AI stock is the right bet for you or if you want to diversify your tech or overall portfolio with a different research/product angle, the answer might be in the evaluation of one stock from each segment of the tech sector.
The case for a robotics stock
Kraken Robotics (TSXV:PNG) is a Canadian-based robotics company specializing in underwater robotics — i.e., creating sensors, software, and hardware for various underwater tasks. Kraken’s products serve various purposes, including sea-bed imaging, shallow-water surveys, etc. They even make batteries for various underwater tasks.
The company offers its services to a wide variety of businesses from several different sectors. Its client portfolio includes energy giants, weapons manufacturers, and navies of four countries. The overall portfolio includes 50 clients from 30 countries.
The company operates in a particular/niche market, including unmanned underwater vehicles (UUV), but it has enormous value. This is evident from its financial and profitability metrics, which investors have also picked up. The stock has shot up 230% in the last 12 months alone. Its market value is still small, but some experts predict it might become a multi-billion-dollar giant.
The case for an AI stock
Coveo Solutions (TSX:CVO) is not a pure-breed AI company or stock, as it wasn’t built around a specific AI product. It was a search and discovery platform designed for the various needs of various businesses. This made it naturally suited for significant AI integration and enhancement, and now, the company has supercharged the platform with multiple AI features and aspects.
Many of its core strengths, like a variety of integrations and user-friendliness, are still there and are even enhanced thanks to the AI integrations. Now, it’s marketing its platform as an AI-search & generative experience platform. The company is growing its portfolio as well and has signed 30 new generative AI contracts in the latest quarter.
However, despite impressive operational growth and modestly healthy financials, Coveo stock is struggling to get out of the slump it has been in almost since its inception. It’s trading at a 63% discount from its initial public offering price, and the bear market phase is still going strong. Assuming it turns things around and starts riding the AI hype train, the discount is in the company’s favour.
Foolish takeaway
If we limit ourselves to these two stocks, the robotics stock seems to have a clear edge over the AI stock. But that’s not a generalization you should extrapolate to the sector/industries as a whole.
AI stocks are becoming more mainstream, which means it’s easier to understand their business models and potential than dark horse robotics stocks. While robotics may require more effort, the payoff might be equally impressive.
