AI Investing on the Cheap! 2 Inexpensive Tech Stocks Worth Buying Up Now

Written by Joey Frenette at The Motley Fool Canada

The artificial intelligence (AI) revolution has made a lot of tech-focused investors money in the past couple of years. Undoubtedly, the Magnificent Seven (the group of seven tech stocks that have made the most of the AI uprising) have enjoyed much of the spoils, and while I do believe that Canadian investors should seek to expose themselves to some (if not all via a low-cost Nasdaq 100 or S&P 500 index fund or ETF) of the names, I also think it’s a good idea to consider some of the other, lesser-known Canadian AI innovators, many of which may not have enough of an AI tailwind priced into their current valuation multiples.

In this piece, we’ll look at two worthy Canadian AI plays that Canadians might wish to consider if they’ve got extra cash to put to work in their TFSAs (Tax-Free Savings Accounts).

Celestica (TSX:CLS) stock is now up an outstanding 154% so far this year and more than 1,000% in the past two years. Indeed, Celestica is a name that I’ve praised a number of times in the past five years. And while there’s no turning back time to pick up the stock at a fraction of today’s market price (shares go for $340 and change today), I still think there’s a fairly strong case for buying at today’s heights. For a name that’s trading at close to 54 times trailing price-to-earnings (P/E), there’s a lot of expectation involved with the name, especially as it looks to report its next quarter.

The secret is out: Celestica is an AI beneficiary, but it’s one that I think could continue to surprise investors. Indeed, the cloud business has been hot of late, and it’s bound to stay hot, if not heat up further, as the AI revolution continues. Sure, Celestica caught many by surprise with its extraordinary surge. And while the easy money has been made, I still think there’s reason to be a long-term holder in the stock. If Celestica has more quarterly blowouts up its sleeves, I view today’s frothy multiple as perhaps not as lofty as it seems.

Thomson Reuters (TSX:TRI) is another firm that’s serious about leveraging its data advantage to thrive in the AI race. With a sub-par second quarter pushing shares into a bear market (shares down over 20% from highs), I think now could be the perfect opportunity to start adding to or initiating a position. Of course, the $105 billion media titan isn’t exactly cheap at over 47 times trailing P/E, even if there’s ample AI innovations to get excited about in the coming year.

In any case, I like the dividend (1.4% yield) and its ability to grow at a rapid rate as the firm continues to push ahead with AI across its broad range of intriguing new tech-driven tools. Notably, I’m intrigued by the potential of its legal and accounting segments which, I think, could encounter an AI-driven growth spurt at some point down the line.