Stock market investing has not been kind to many investors across the board since 2022 began. While there was an uptick in the market in January, several high-quality tech stocks continue to trade at significant discounts compared to historical valuations. Unfortunately, there is no indication of a significant improvement in the coming weeks for investors holding tech stocks in their portfolios.
Despite a somewhat bleak outlook, a few tech companies in rapidly expanding markets can deliver substantial growth in the next few years. Artificial intelligence (AI) is perhaps one of the fastest-growing market verticals right now. Projected to grow by 38% each year until 2030, according to a Grand View Research report, the global AI market can hit a valuation of US$1.81 trillion at the end of the decade.
Considering the immense growth potential, investing in AI stocks can be an excellent way to put your capital to good use for long-term growth. Today, I will discuss two of the top AI stocks you can consider adding to your self-directed portfolio for this purpose.
CGI (TSX:GIB.A) is a $26.93 billion market capitalization tech company based in Montreal, Quebec, Canada, operating as a multinational IT consulting and systems integration firm. It offers its services in Canada and several other international markets, including the U.S. and Europe.
Besides consulting and systems integration services, it also offers business process and application maintenance services. Its primary vertical market is government, contributing to over a third of its revenue.
The industry it operates in currently remains highly fragmented but boasts strong growth drivers. CGI stock looks well positioned to capitalize on both fronts. Its organic and acquisitions-based growth has made it a force to be reckoned with in the IT space.
The company also aims to utilize end-to-end capabilities in data science and machine learning with deep domain knowledge and tech engineering skills to demystify and deliver responsible AI.
Its first quarter for fiscal 2023 saw CGI stock deliver 11% year-over-year revenue growth. It also has a $25 billion backlog, putting it in a solid position to exhibit substantial growth. As of this writing, CGI stock trades for $126.74 per share.
CrowdStrike Holdings (NASDAQ:CRWD) is a US$31.73 billion market capitalization tech company based in Austin, TX, operating as one of the leading global cybersecurity firms. Known for its pioneering portfolio of enterprise-facing cloud-based products, it is a prominent player in the AI space.
Its Falcon security platform capitalizes on AI tech to identify potential threats. With its machine-learning-enabled features, Falcon will likely become smarter with time, delivering superior results as time passes.
CrowdStrike’s exceptional portfolio increased its retention rate to 98% in fiscal 2022, which is greater than 94% just four years ago. Not only has it managed to increase its number of existing customers, but they have also started increasing spending with the company by at least 20% annually since 2018.
According to its latest quarterly filing, it has over US$2.7 billion in cash, cash equivalents, and short-term investments. Subtracting its long-term debt of US$741 million, it has a solid net cash position of roughly US$2 billion. Projected to hit revenues of US$2.23 billion in fiscal 2023, CRWD stock trades for US$134.54 per share as of this writing.
The development of AI technology is fascinating. While some are worried about the alarmingly quick progress of the technology of late, there is much to celebrate about its potential. Regardless of people’s opinions on it, AI will likely become integral in the future. Right now, exposure to the AI space can be an excellent decision for Canadian stock market investors seeking immense long-term growth.
CGI stock and CrowdStrike Holdings stock are two examples of AI stocks you can add to your portfolio to leverage the growth AI stocks have to offer in the coming decade.