Considerations
The first thing to consider is what kind of AI exposure you are actually buying. Not all AI stocks are constructed the same. Some, such as chipmakers or data center providers, provide the “guns and shovels” that drive the industry. Others, such as software companies, use AI to improve services, improve productivity or sell AI-driven solutions. Infrastructure companies often offer more stable growth than speculative startups. The best bargains tend to come from companies with real revenue tied to AI adoption, not from companies that rely on distant promises.
Appreciation is the next big piece. Many AI stocks have risen on excitement rather than fundamentals, making it critical to focus on price relative to earnings and cash flow. A company growing sales at 20% but trading at 100 times earnings could be overvalued, while another growing 10% at 20 times earnings could be a real deal.
Another factor is the moat of AI share in the space. True long-term winners not only use AI, but also possess unique data, infrastructure or algorithms that others cannot easily replicate. This could include proprietary data sets, deeply integrated business customers, or proprietary technology that can scale efficiently. AI stocks with a strong moat have much better chances of maintaining their gains as AI competition increases.
Consider Kinaxis
Kinaxis (TSX:KXS) could be one of the most underrated AI buys on the market TSX now. While the market has given the US giants attention and high valuations, Kinaxis has quietly built a powerful, AI-driven supply chain platform that is essential to the way global companies operate. It is profitable, growing and embedded in industries that cannot afford inefficiency. Still, after a period of volatility, AI stock is trading well below its historical valuation, giving long-term investors the opportunity to buy a true AI leader at a discount.
Kinaxis provides supply chain management and planning software to some of the world’s largest manufacturers, retailers and life sciences companies. Its flagship product, RapidResponse, uses AI and predictive analytics to simulate supply chain disruptions and optimize decisions in real time. It is practical, profit-enhancing technology embedded in mission-critical systems of companies such as… Ford, UnileverAnd Johnson & Johnson.
Financially the company is solid. In its latest quarterly results, Kinaxis reported revenue of US$136.4 million, up 15% year-on-year, while subscription revenue rose 17%. Yet AI stock trades at just 31 times forward earnings and 7.4 times sales, well below pandemic highs. With recurring revenue rising, profitability intact, and a growing AI lead, the current price seems disconnected from its long-term potential. Especially when you add a customer retention rate of over 95%.
In short
In short, Kinaxis is the rare combination of growth, profitability and AI deep trading below fair value. It’s not speculative, and it’s not priced for perfection. Instead, it’s a Canadian software leader with proven technology, real demand and a balance sheet strong enough to keep innovating. Investors continue to chase the usual AI stocks at inflated valuations. Yet Kinaxis offers a high-quality business that is already profitable, already using AI at scale, and quietly positioned to lead one of the most vital transformations in global commerce. For long-term investors, this makes Kinaxis one of the best AI buys on the market today.
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