There have been technologies and discoveries that have changed the world in unprecedented ways – The discovery of fire, metals, industrialization, plastic, computer, the internet, and even social media.
Even though it’s currently in its infancy, artificial intelligence has the potential to change the world in ways that we just can’t predict yet.
Even by our best estimates, we are decades away from true artificial intelligence (or artificial general intelligence), but AI’s practical applications are already numerous and growing by the day.
It wouldn’t be a stretch to say that investing in the best AI stocks in Canada can turn out to be like investing in Amazon at its IPO before you even knew what e-commerce was.
What Do Investors Need To Know About AI And AI Stocks?
Even if tech’s not your thing, there are a few things you should know about artificial intelligence (AI). First, machine learning (ML) and Data Science, even though they are often used in conjunction with AI, are not interchangeable with them.
Machine Learning is a part/a subfield of AI, and Data Science overlaps quite heavily with AI. AI also overlaps with robotics quite a bit.
First of all, when I say AI, I don’t mean computers, devices, or robots that can think and act like humans. That’s Artificial General Intelligence which might happen by 2050 (or a bit sooner).
Artificial Super Intelligence is even farther off into the future and not our concern right now. What we are interested in is the third, most commonly used category of AI: Narrow AI. That has been in use for several years, and several applications that use such AI have been refined to near perfection already.
Most common examples include facial recognition, personal assistants like Siri and chatbots, email filters that detect spam, YouTube’s algorithm that determines your feed/suggested videos and filters out content, self-driving cars, etc.
To simplify, if you encounter a piece of software or hardware that can learn to do a specific task (if taught the right way) and performs it with minimal or no human supervision, it might be an AI.
It’s a very narrow definition and doesn’t encompass what an AI is, but it’s enough to get us going.
What Are AI Stocks?
AI stocks are stocks of companies that have created a specific AI-based product or offered AI solutions.
A broader definition includes all companies that extensively use AIs to improve or add to their products or are redefining/improving their product using AI.
That creates a much bigger pool of potential investments, which also includes companies that might not be as dependent upon AI as true AI stocks are. However, this distinction is highly subjective.
For my list of the best AI stocks in Canada, I’ve chosen companies whose products or solutions rely so much on AI that AI is their selling point or what they have built their products/solutions around.
Can AI Stocks Be Profitable?
Yes. AI is still developing, and different narrow AI applications are evolving at a different pace.
Some, with more data and the right approach, might outpace the other and achieve a breakthrough, which might expedite its growth pace in its respective industries.
Even if it’s a massive spike and not explosive linear growth, the opportunity is worth considering.
Best AI Stocks In Canada (And The US)
The TSX has a handful of AI stocks. Most of them represent budding, small and nano-cap companies. But with advances in AI, these stocks might soar under the right market conditions.
1. Fobi AI Stock (TSXV)
Fobi, which used to be Loop Insights, is an AI-based platform that allows businesses to track, compile, and use the data generated by their consumers in real-time.
Its core strength is data connectivity across multiple dimensions. The AI that powers the platform allows businesses to use that data to their advantage and produce insights that they can implement to better interact with their customers right away.
Since its inception in 2019, the stock managed to grow over 500% in less than two-and-a-half years, but that peak is long gone. But understanding that this little micro-cap is capable of that kind of growth can help you make a smart investment decision.
2. mCloud Technologies (TSXV)
mCloud is all about power management and energy waste, a domain that’s becoming increasingly vital in the current ESG-facing business environment.
Through its AI-powered predictive maintenance of different assets in a business (including building-related assets like HVACs), the company aims to keep the systems in optimal shape, energy waste, and cost to a minimum. The tool is highly reliant on AI.
The Calgary-based company has been around for a while, and the stock joined the TSX in 2017. But its reliance on the energy sector has weighed down its performance so far.
However, more ESG transparency requirements might create more need in the market for the company’s services.
3. VIQ Solutions (TSX)
It’s another micro-cap company that’s leveraging AI to power its services: Automated transcription. Natural Language Processing (NLP) is an important part of AI, and the company uses it for its transcription service.
The company manages digital content security while adhering to strict security and compliance protocol since it primarily caters to legal, criminal justice, and insurance clients, i.e., all industries where confidentiality is paramount.
However, that’s the rebranded VIQ services that heavily leverage AI. It’s inherently an IT service management company. The stock has been quite rewarding with its cyclical growth and offered 400% and 1,500% returns on two different occasions in the last ten years.
4. Goldspot Discoveries Stock (TSXV)
AI can be used in a number of inventive ways, given that you have the right approach to it. Goldspot uses it, or more specifically, the machine learning element of it, to analyze drill core images.
The analysis allows Goldspot’s proprietary imaging technology to determine geologically relevant pieces of information. It basically gives mining companies a lot more data for something they were already doing: Drilling.
Since its inception, the stock has spiked once, and if someone had bought it during its lowest point, they would have grown their capital by over 1,400% in less than two years.
5. DataMetrex AI Stock (TSXV)
AI has been aggressively used in cybersecurity nowadays. That’s because due to the heavy digitization of data and online reliance of businesses, the “attack surface” has gotten enormous, and it’s almost impossible for conventional cybersecurity tools to cover everything and keep up with the attacks.
AI-powered cybersecurity tools are the next generation defense, and that’s something DataMetrex engages in, albeit in an unconventional way. However, its reliance on AI-powered analytics is quite evident.
The stock joined the TSX in 2017 and has spiked twice ever since. It grew a whopping 3,900% the first time and about 2,900% during the second spike.
6. Predictiv AI Stock (TSXV)
Predictive is a tiny nano-cap company with a very small price tag and market capitalization. It has shrunk to a fraction of itself over the last few years.
This AI company caters to a variety of markets, and as the name implies, allows them to learn from data and make relatively accurate future projections.
The potential seems quite strong, but so far, neither the company nor the stock has truly lived up to the potential, and things have been in decline almost since inception.
If the company manages to grow its clientele and carves out a place for itself in this niche of AI, it might become a powerful holding in the future.
Many Canadian-focused lists of AI stocks add Docebo in the mix as well, but like Microsoft and Amazon, it’s not a “true-blooded” AI company. It’s a learning platform that includes some AI features.
The US markets have an interesting collection of AI companies. And if you don’t mint investing across the border, you can grow the size of the available AI stock pool that you may have access to quite considerably.
7. C3.AI Stock (NYSE)
With an honest-to-topic ticker, C3.AI is an enterprise AI company. It allows businesses to unify/compile their business data across multiple dimensions into one platform and then build and apply AI models to that data to derive useful insights.
The company has helped create 4.8 million such AI models yet and facilitates about 1.7 billion predictions per day.
The role of the company is as a facilitator of AI solutions, and as AI becomes more mainstream, so will the demand for such companies. The stock has fallen a long way from its promising IPO valuation, but it has decades to reach or exceed that point.
8. SentinelOne Stock (NYSE)
This end-point cybersecurity company has used AI to strengthen its cybersecurity platform.
The main strength of the company’s security platform is that it has connected intelligence, i.e., all the end-points/nodes in the corporate network are connected, and with behavior analysis and the knowledge of end-point-specific threats, all of them can be intelligently guarded thanks to AI-powered cybersecurity.
The company joined the stock market in 2021 and has performed well for relatively young stock.
It’s already comparable to better-known cybersecurity solutions like McAfee, and if it continues to grow its consumer base and keeps delivering on its security promise, it’s likely to excel as an investment too.
9. Ambarella Stock (NASDAQ)
AI-based image signal processing: That’s the focus and forte of Ambarella. The company leverages AI not just to power its software but to make its hardware more efficient as well.
An example is its high-res cameras, which, when coupled with the right neural nets and image processing algorithms, allow smarter data extraction from their live video feeds. It has uses in automobiles and physical security, among others.
The stock is capable of decent growth when the market conditions are right. And if the specific AI niche market segments it caters to gain more traction, the stock is highly likely to soar to new heights.
Most Prominent “AI Stocks” That Are Not A Part Of This List
Whenever you search for the best AI stocks, there are a few names that would be part of almost every list that pops up in your search results. I haven’t added them to my list of AI stocks, but they do bear mentioning.
Five of them are the most well-known tech giants in the world. The reason not to add them to the list of best AI stocks is that AI was not the reason for their success or the primary ingredient of the product/solution they offer.
It has simply been a tool that’s now improving/enhancing the product or solutions these companies offer.
Unless otherwise specified, all stocks below are listed on NASDAQ.
Alphabet Stock (GOOGL): Google is the most famous search engine, and its parent company is one of the heavyweights on NASDAQ. It extensively uses artificial intelligence for a number of applications, including its behemoth of an algorithm.
But even though AI is the future of Google, it’s not the reason Alphabet is a US$1.7 trillion company.
Microsoft (MSFT): As the most used operating system in the world, Microsoft will inevitably become a facilitator of numerous AI technologies and software applications. Currently, its most common use of AI is in bots.
The Azure bot service is an important part of the Microsoft family and can be connected to a number of other applications and suites, like Microsoft Teams. But it became a software empire long before AI gained traction.
Amazon (AMZN): For Amazon, the most critical use of AI is to understand customer behavior and use the insight to better the algorithm and its e-commerce model.
But Amazon rose to prominence as an e-commerce giant and with a business model that is only now becoming properly reliant on AI.
Meta (FB): As the premier social networking giant, Meta uses AI for a variety of applications.
That includes cleaning/identifying harmful content. But most prominent use is perhaps understanding text-based language and messages, understanding and identifying intentions, etc. But AI was not the reason for the company’s meteoric rise.
IBM (NYSE:IBM): Despite being a giant in the hardware space, IBM has grown quite extensively in other areas as well, including AI. The AI solution they offer is tied to their cloud services. But it’s part of a much larger solution portfolio.
Nvidia (NVDA): Nvidia has made its mark in the GPU space, where it’s the second-largest company in the world (After intel).
However, the company has rebranded itself as an AI company now, thanks to its overlap with gaming which has extensive AI applications. But it got to its heights on the basis of different technology.
DocuSign (DOCU): It’s another tech company that leverages AI to analyze e-contracts. But the company’s forte is its “agreement cloud” and its e-signature services, and AI is just an element of it.
Almost all seven of these companies are worth buying now and holding long-term due to the market they have secured. They are not businesses that might exponentially grow thanks to an AI-based breakthrough or a radical shift in their product/service offering via AI.
What Canadian AI Stocks Are publicly Traded?
The following are some of the AI stocks that are being publicly traded in the Canadian markets right now.
- VIQ Solutions Inc
- mCloud Technologies
- FOBI AI
- Goldspot Discoveries
- DataMetrex AI
- Predictiv AI Stock
AI Penny Stock In Canada
The following are the AI penny stocks currently trading in the Canadian markets.
- VIQ Solutions Inc
- FOBI AI
- Goldspot Discoveries
- DataMetrex AI
- Predictiv AI Stock
How To Buy AI Stocks In Canada
The cheapest way to buy stocks is from discount brokers. My top choices in Canada are:
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To learn more, check out my full breakdown of the best trading platforms in Canada here.
AI stocks have the potential to explode once they gain enough traction and create enough disruption in the market segment they are in.
Every business understands the need to remain up-to-date with their tech tools, and as those tools become more AI-oriented, companies like the ones on this list might find new business avenues open up.
But given the timeline of each narrow AI’s maturity and the range of its practical application, it can be a long-term bet. However, if the payoff is right, it would reasonably justify the waiting period.
And if you would rather have the broad-spectrum tech focus, these tech ETFs might be worth checking out.