Despite the popular opinion, Canada is not omitted from the AI revolution – far from. Hear how Canadian shares such as Buck (TSX: CVO), Kineraxy (TSX: KXS), and Shopify (TSX: store) is square in the middle of the tree.
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Transcript
Nick Sciple: I am Motley Fool Canada Senior Analyst Nick Sciple, and this is the ‘five -minute major’, here to make you a smarter investor in about five minutes.
Artificial intelligence is not only a Silicon Valley story anymore. It reforms industries around the world – and in Canada there is a growing group of companies that put AI to work. From Enterprise software to logistics to e-commerce, Canadian AI shares cut their place on the world stage. In today’s episode of ‘The Five-Minute Major’, we look at what drives this trend and where investors have to pay attention.
My guest today is Motley Fool Canada Chief Investment Officer Iain Butler. Iain, thank you for coming to me.
Iain Butler: Great to be here on this beautiful September day, Nick.
Nick: So AI dominates headlines, but many Canadian investors may not realize how much of it happens at home. How today can Canada participate in the Global Ai Boom today?
Iain: I am actually guilty of saying that we have omitted ourselves a little from this tree within the Canadian market, but it’s just not true. We Canadians are usually modest, and as you say, Nick, many of us do not realize that Canada has been in front for decades.
So some of the core breaches in deep learning came from Canadian universities, and that foundation really helped to create AI research shubs of World Class here at home.
Nowadays that has left us with more than a thousand AI startups that are located in Canada. That is according to the Vector Institute.
And the ground zero for this is actually Montreal. It is where a real rebellion has taken place and Montreal serves as a home base of the greatest concentration of deepening of researchers in the world. So although many of us, we Canadians, may be in the dark with this proliferation, that is not the worldwide technical giants. Google, Meta (formerly Facebook), Microsoft and others all have large AI Laboratories here in Canada, to the point that Toronto was one of the very first places that Google’s DeepMind expanded outside the UK.
Surprisingly, even our politicians have also arrived on the right side of this trend. So Canada actually launched the world’s first national AI strategy in 2017, with hundreds of millions of dollars in federal financing to grow local talent and to maintain that research leadership.
And here is a commercial payment. We have a number of real companies, living and respiratory companies where we can invest in these lines. Companies such as Coveo, Kinaxis and Shopify all weave AI directly in their products.
I said a lot here. Let’s summarize quickly: we are not a bystander. Canada is not just a bystander in this movement. We are an early innovator, Global Talent Hub and increasingly a place where investors can find AI opportunities.
Nick: So, Iain, you mentioned a few listed companies in that Spiel. What are some AI options available for Canadians on the public markets that should be on the radar of investors?
Iain: It was a spiel, you are right! So those three companies, Coveo, Kinaxis and Shopify are current recommendations Stock Advisor CanadaThat is our flags-chip-all-stock service here at Motley Fool Canada. So starting with Coveo, a company in Quebec, it is in the use of AI to make digital experiences smarter. Think about search bars on company websites, product recommendations and even customer support. So they are really busy earning AI for their customers, and that customer list contains some powerhouses such as Salesforce, SAP and Adobe, making it a fairly compelling situation.
That’s Coveo.
Kinaxis is based on Ottawa. The company offers software that helps its customers with supply chain. I think that if the pandemic teaches us something, it is that Supply Chain Management is quite important to get good. AI is built into the software bid of Kinaxis. It serves as the backbone of the tools it offers to its customers.
And these tools are largely able to simulate only thousands of different What-IF scenarios. What if part A does not arrive? What if part B does not arrive? How do we justify that situation? So, Kinaxis has long been a recommendation of our service, and it is very, very well executed and it was fascinating to see it evolving over the years.
And then finally, talking about long -term recommendations, we first put Shopify for our Canadian members a long time ago, just after the IPO in 2016.
It’s done well. Of the three I suspect and I hope that Shopify needs the least in terms of an introduction, but although it is the second largest company in Canada due to market capitalization, I still don’t think many Canadians know that. Shopify is therefore a platform where e-commerce occurs. Companies can put their business on the internet, with the help of Shopify and use it to sell their wares.
We will run a little over time, but what does it matter?
Shopify has built this platform over the years with different tools. These are becoming more and more oriented. Companies on the platform, as soon as they come to the platform, start using these tools, they cannot leave, otherwise their company will disappear. So Shopify has one of the sticker business models that you will ever find, and it has been a glorious company to watch, and a glorious investment for our members and many Canadians.
Nick: Yes, Iain, so ai is one of the determining trends of this decade, the 2020s, and there are Canadian companies in the mix, whether it is less well-known names such as Coveo or Kinaxis, or the big dog in the TSX, Shopify, there are a Build-Canadian shards, and the set-up, and the set-up, hanging. That is all the time we have for today’s edition ‘The five -minute major. Thank you for joining us, and we hope to see you again next time.
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