4 Top Canadian AI Stocks You Need to Look at for February 2025

Key takeaways

Canada is emerging as an AI leader: Canadian companies like CGI Group, Kinaxis, and Celestica are integrating AI to solve real-world challenges across industries like supply chain, enterprise data management, and customer experience.

AI adoption is accelerating across sectors: From supply chain automation to personalized e-commerce, AI is becoming indispensable, creating strong growth tailwinds for companies innovating in this space.

Balancing opportunity with risk is crucial: While the AI sector offers massive upside, investors should watch for risks like competition from global tech giants, high valuations, and economic sensitivity impacting enterprise spending.

3 stocks I like better than the ones on this list.

Artificial Intelligence (AI) has everyone buzzing right now. Investors are eagerly hunting for the next big AI stock in Canada. It’s no secret that AI is becoming super important these days, and folks are using AI-powered tech all the time.

There are plenty of ways to get exposure to artificial intelligence here in Canada, even in some industries that you may never think of, particularly utilities. Although the opportunities here aren’t as broad as the United States, we do have some companies that have benefitted substantially from the increased demand for power, data center infrastructure, and chips.

Lets get right into the article.

Global IT consulting and solutions provider

CGI Group (TSE:GIB.A)

CGI Group is one of the world’s largest IT consulting firms, offering end-to-end services that include systems integration, managed IT solutions, and consulting. The company serves industries like banking, healthcare, and government while integrating AI and automation into its offerings. With a global footprint and a steady focus on growth, CGI delivers mission-critical digital transformations.

P/E: 20.2

5 Yr Revenue Growth: 3.4%

5 Yr Earnings Growth: 9.4%

5 Yr Dividend Growth: -%

Yield: 0.1%

  • Established global leader with 400+ offices in 40+ countries.
  • Strong focus on AI to optimize IT systems and support digital transformation for clients.
  • Consistent revenue growth and resilient profitability with diversified client industries.
  • Long-standing contracts with government and enterprise clients provide stable cash flows.
  • Opportunistic acquisitions to bolster AI and digital capabilities.
  • Lean operational model with a focus on shareholder returns, including share buybacks.
  • Digital Transformation Demand: Enterprises increasingly rely on CGI for AI-driven modernization, presenting long-term growth opportunities.
  • AI Integration: CGI is embedding machine learning and predictive analytics into its services, making them more competitive.
  • Government Contracts: These contracts offer reliability but may be sensitive to budgetary changes.
  • Acquisition Strategy: Strategic acquisitions in the AI space could strengthen CGI’s technological edge.
  • Competition: Global consulting players like Accenture and IBM are fierce rivals in AI solutions.
  • Client Concentration: Dependence on a few major clients can be a potential revenue risk.
  • Economic Slowdowns: Tight IT budgets during recessions could reduce demand for consulting services.
  • M&A Execution: Acquisitions always carry integration risks, which could hamper margins.

AI-driven supply chain management solutions

Kinaxis (TSE:KXS)

Kinaxis specializes in cloud-based software for supply chain planning and operations. Its flagship product, RapidResponse, uses AI to help businesses manage inventory, forecast demand, and improve supply chain efficiency. Major industries served include automotive, pharmaceuticals, and consumer goods.

P/E: 184.6

5 Yr Revenue Growth: 24.2%

5 Yr Earnings Growth: -7.6%

5 Yr Dividend Growth: -%

Yield: -%

  • Leading player in supply chain management with AI-driven solutions at its core.
  • Demand for resilient supply chains ensures strong long-term tailwinds.
  • Expanding international presence with new partnerships and contracts.
  • Subscription-based SaaS model drives predictable, recurring revenue.
  • Well-diversified client base across industries ensures stability.
  • Heavy focus on R&D ensures continued leadership in supply chain AI innovation.
  • Supply Chain Resilience: Post-pandemic disruptions have elevated demand for Kinaxis’ AI tools.
  • Geographic Expansion: Growth into Asia-Pacific and Europe could unlock significant revenue streams.
  • AI and Automation: Kinaxis is enhancing its product suite with real-time AI-driven analytics.
  • SaaS Adoption: Businesses are increasingly adopting subscription models, which aligns with Kinaxis’ growth strategy.
  • Economic Sensitivity: Downturns could delay enterprise decisions to invest in supply chain software.
  • High Valuation: Shares trade at premium multiples, leaving little room for error.
  • Competition: Players like SAP and Oracle also offer advanced supply chain solutions.
  • Customer Concentration: Some reliance on large contracts creates revenue volatility risks.

Renewable energy producer with AI-driven efficiency

Capital Power (TSE: CPX)

Capital Power is a power generation company with a focus on renewable and thermal energy projects across North America. They’re integrating AI into their operations to optimize electricity production, manage grid stability, and reduce downtime through predictive maintenance. Their AI tech improves the operational efficiency of wind farms and other renewable facilities. In addition to this, they should be a main beneficiary to data center demand.

P/E: – 14.8

5 Yr Revenue Growth: 25.1%

5 Yr Earnings Growth: 22.8%

5 Yr Dividend Growth: 6.7%

Yield: 4.1%

  • Strong renewable energy portfolio poised for future demand.
  • Leveraging AI for improved energy production efficiency and cost management.
  • Stable cash flow supported by long-term power purchase agreements.
  • Dividend growth record with a 5-6% yield.
  • Carbon capture and storage initiatives that could benefit from government incentives.
  • Solid presence in the North American energy market with room for expansion.
  • Data center expansion in Alberta could be a consistent tailwind.
  • AI Adoption in Power Generation: Increasing use of AI to improve efficiency and cut costs will impact profitability over the short-term.
  • Carbon Regulations: The company’s efforts in reducing emissions may influence access to new government incentives.
  • Renewable Energy Transition: Capital Power’s ability to expand its renewable portfolio will shape its growth.
  • Grid Demand and Stability: Data center demand will ultimately boost the need for Capital Power’s electricity.
  • Energy Price Volatility: Power prices can fluctuate, impacting margins and cash flow.
  • Technological Adaptation: AI upgrades may require significant capital and could face delays or setbacks.
  • Regulatory Compliance: New energy policies and regulations could increase operational costs.
  • Renewable Competition: New entrants in the renewable space could reduce growth opportunities.

Hardware manufacturer with AI and cloud integration

Celestica (TSE:CLS)

Celestica is a global electronics manufacturing and supply chain solutions provider. They help major tech companies design and produce hardware for AI infrastructure, including servers, networking equipment, and storage solutions. As AI adoption accelerates, Celestica’s role in supporting AI-driven hardware production is critical for growth.

P/E: – 40

5 Yr Revenue Growth: 4.6%

5 Yr Earnings Growth: 24.7%

5 Yr Dividend Growth: N/A

Yield: N/A

  • Expanding footprint in AI-related hardware manufacturing.
  • Partnerships with major cloud and data center companies.
  • Diversified business model, covering multiple tech and industrial sectors.
  • Focused on improving margins through automation and AI-driven manufacturing processes.
  • Strong revenue growth from cloud computing infrastructure demand.
  • Positioned to benefit from AI-driven increases in semiconductor demand.
  • AI Hardware Demand: Increasing need for data center equipment and AI infrastructure boosts Celestica’s business.
  • Supply Chain Management: Celestica’s ability to maintain efficient supply chains will determine profitability.
  • Partnerships with Tech Giants: Collaborations with AI and cloud leaders will impact revenue growth.
  • Automation Initiatives: The company’s use of AI in manufacturing to reduce costs and improve product quality is key to staying competitive.
  • Supply Chain Disruptions: Global semiconductor or material shortages could hamper Celestica’s ability to meet demand.
  • Technological Obsolescence: AI hardware evolves quickly, and Celestica must keep up with innovation to remain relevant.
  • Margin Pressures: Rising input costs and competitive pricing could hurt profitability.
  • Economic Slowdowns: A tech spending downturn could impact orders for AI infrastructure hardware.

Transformer manufacturer improving grid AI integration

Hammond Power Solutions (TSE:HPS.A)

Hammond Power Solutions specializes in electrical transformers, serving industrial, commercial, and utility markets. Their products are essential for stabilizing and distributing power, especially in systems integrating AI-driven smart grids. As AI-enhanced infrastructure like smart factories and grids expands, Hammond is a key supplier.

P/E: – 22

5 Yr Revenue Growth: 17.7%

5 Yr Earnings Growth: 64%

5 Yr Dividend Growth: 18%

Yield: 0.8%

  • Growing demand for transformers due to smart grid and AI infrastructure upgrades.
  • Strong presence in North America’s industrial and energy markets.
  • Long-standing reputation for quality and reliability in critical power infrastructure.
  • Expanding product line to meet evolving energy needs, including renewable and distributed power.
  • AI-driven grid optimization projects rely on robust transformer technology.
  • Opportunities to support next-gen factories implementing AI and automation.
  • Smart Grid Expansion: Utilities increasingly use AI to manage grid operations, driving demand for Hammond’s transformers.
  • Industrial AI Adoption: Factories using AI-powered automation need stable, adaptable power systems.
  • Energy Infrastructure Investments: Government spending on energy modernization could benefit Hammond.
  • Electrification Trends: As industries shift to electric power, demand for transformers in distributed energy systems is rising.
  • Project Delays: Large infrastructure projects can be delayed due to financing or regulatory approval.
  • Competitive Landscape: Competitors offering cheaper or more advanced transformer solutions could threaten market share.
  • Commodity Prices: Rising costs for key materials like steel and copper can squeeze margins.
  • Technological Shifts: If energy systems evolve faster than Hammond’s product development, the company could fall behind.

What exactly is AI?

“…a field which combines computer science and robust datasets to enable problem-solving. It also encompasses machine learning and deep learning sub-fields, frequently mentioned in conjunction with artificial intelligence.”

IBM is a global AI leader, and its roots date back to 1997 when IBM’s “Deep Blue” beat world chess champion Garry Kasparov.

Today, IBM’s Watson, the world-renowned supercomputer, has evolved into an enterprise AI-driven technology that “gives enterprises the AI tools they need to transform their business systems and workflows while significantly improving automation and efficiency.”

AI has become so prevalent that any newly introduced technology worth its value makes use of AI, and the industry, and thus AI companies will continue to grow exponentially for years to come.

Many investors who think of tech and AI look south of the border, especially with revolutions like Chat GPT from OpenAI or Bard from Google.

How can investors take advantage of Canadian AI stocks?

There is no easy answer. Suppose you are invested in data or software-as-a-service (SaaS) companies. In that case, it is likely you already have indirect exposure. Companies like Shopify (TSE:SHOP) and Kinaxis (TSE:KXS) leverage AI within their flagship products.

Companies like Microsoft (MSFT), Amazon (AMZN), Netflix (NFLX), Nvidia (NVDA), Alphabet (GOOG), and Facebook (META) also mix into the AI industry to varying degrees.

Another way to look at investing in AI is to look for companies that are helping others transform their businesses through AI. In Canada, there aren’t too many companies like the big tech options in the US, but there are certainly still strong options.