Artificial intelligence (AI) has emerged as one of the most exciting and disruptive technologies in recent years, revolutionizing various industries and sectors. Large language models like OpenAI’s GPT and Google’s Gemini have gained popularity, showcasing the broad applications and use cases of AI and machine learning. Companies leveraging AI effectively stand to benefit from this huge market opportunity. According to a report by Precedence Research, the AI market in Canada was valued at US$43.7 billion in 2022 and is projected to grow at a compound annual growth rate of approximately 19% over the next decade.
Investing in OpenText (TSX:OTEX)
One notable Canadian company heavily investing in AI technology is OpenText (TSX:OTEX). Known for its enterprise information management software and cloud services, OpenText has a market cap of $11.3 billion with its stock trading at $41.48 per share and nearly 26% year-to-date losses. Despite the recent stock price declines, OpenText's annualized dividend yield has risen to 3.3%.
Headquartered in Waterloo, OpenText helps businesses manage, secure, and extract value from their data and content through AI-powered solutions. The company's strategic focus on AI technology positions it as one of the best Canadian AI stocks to consider investing in.
Reasons to Consider OpenText Stock
While OpenText stock has experienced a significant downside correction in 2024 after a 39% rally the previous year, the recent declines may not fully reflect its long-term growth potential. In the 12 months ending March 2024, OpenText's total sales jumped 51.4% year over year to US$5.9 billion, supported by strong performance in its cloud and annual recurring revenues. The company also saw a 28.5% year-over-year increase in its adjusted earnings to US$4.10 per share, surpassing analyst expectations.
OpenText's portfolio of AI solutions designed for various industries and applications, such as the Magellan platform and Core Experience Insights tool, positions it for future sales and earnings growth. These innovative solutions utilize natural language processing, machine learning, and advanced analytics to drive insights and recommendations.
In addition to its financial growth trends, OpenText's focus on strategic acquisitions, cloud expansion, and shareholder value through share buybacks and dividends makes it a compelling investment opportunity. Despite recent declines, the stock may be undervalued based on its long-term growth potential.
Conclusion
As companies across industries increasingly adopt digital transformation, the demand for AI solutions is likely to grow. OpenText's position as a leader in AI technology, coupled with its strong financial performance and strategic initiatives, makes it an attractive investment for those looking to capitalize on the AI market.
Before making any investment decisions, investors should conduct their own research and consider the potential risks associated with investing in the stock market. By staying informed and staying vigilant, investors can navigate the complexities of the market and make informed decisions.
