Finding top AI stocks is a task usually reserved for U.S. growth investors. The number and quality of companies listed on U.S. exchanges mean that the U.S. market receives a disproportionate amount of AI stock attention, and for good reason.
However, the TSX has a number of top AI stocks worth considering. Being listed on Canadian exchanges, these companies may not get the love and attention many investors may think is warranted — and that can work to our benefit because the shares can be more fairly valued!
Let’s dive into a few AI stocks that Canadian investors should consider.
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Top Canadian AI stocks to buy
Celestica (TSX:CLS) has risen quickly as a TSX leader in the electronics manufacturing sector. The company’s rapid adoption of AI has led to stellar growth, with earnings growth actually outpacing revenue increases over the past five years (79.5% to 23.3%, respectively).
For those who believe in the long-term trends underpinning the electronics market and that AI can revolutionize this space, Celestica is a stock to keep an eye on. I’ve been skeptical of this company in the past, but it does trade at a reasonable price-earnings multiple of less than 14 times, so it may be worth a look here.
Kinaxis (TSX:KXS) is a top Canadian tech stock I’ve touted in the past as a key way to play growth in the software sector. That thesis continues to hold true. However, Kinaxis has continued to garner attention as an AI standout, focusing on utilizing artificial intelligence technology in supply chain management.
This transition to becoming an AI-first company hasn’t necessarily translated into a surging stock price (yet). And with a reasonable valuation as well, this is a company I’d put into a “strong buy” category right now, for those who think these trends will bleed over into Canada.
Other options for AI investors
For Canadian investors who don’t want to pick individual stocks, there are a slew of exchange-traded funds (ETFs) to choose from that track the AI trend. Sector-specific and bespoke ETFs have become more commonplace, and there are simply too many to list. If you’re seeking low-cost diversification in AI, these funds could be a good choice for most passive investors.
For others who are looking at U.S. AI companies, a top way to play this space in a Canadian fund can be to purchase the Canadian Depository Receipts (CDRs) of such firms. Doing so allows for the purchase of U.S. securities in Canadian dollars, removing some of the exchange-rate-related risks with these investments. That said, these can be less liquid than buying stocks on an open exchange, so it’s buyer beware on that front.
