IMF chief Kristalina Georgieva has warned that rapid AI investment could create shocks if earnings fail to keep up, which puts a spotlight on what investors are paying for technology stories today. That concern can make overlooked Canadian tech stocks on reasonable valuations more interesting. This article walks through three picks from a value focused tech screen that may appeal to investors who prefer not to overpay for growth stories.
The three stocks below are just a sample, as the full undervalued tech screen surfaced 13 more Canadian listed companies with equally compelling narratives that are not covered in this article. If you want to identify potential higher conviction ideas right now, go straight to the Undervalued Tech screener to filter and analyze the wider opportunity set.
Lightspeed Commerce (TSX:LSPD)
Overview:Lightspeed Commerce provides a cloud-based commerce platform and payments tools that help retailers, restaurants, and golf courses run omnichannel operations.
Operations:Lightspeed generates about $1.24b in revenue from software and programming, reflecting its focus on subscription and transaction based services.
Market Cap:CA$1.88b
Lightspeed Commerce matters for this undervalued tech screen because its core SaaS and payments engine links directly to recurring, transaction driven commerce spending.
"Accelerating adoption of digital payments and cloud-based platforms in retail and hospitality, core to Lightspeed's growth strategy, continues to boost subscription and transaction-based revenue, supporting an expanding total addressable market and steady revenue growth."
The real swing factor is how one pressure on future profitability shapes investor confidence in that recurring payments heavy model.
If that pressure point on margins is what interests you, read the full narrative for Lightspeed Commerce to learn how Lightspeed Commerce's payments mix and cost base could decouple.
Celestica (TSX:CLS)
Overview:Celestica builds and manages hardware platforms and full-product supply chains for cloud providers, hyperscalers, and diversified industrial and HealthTech customers, aligning closely with data center and AI hardware demand without relying solely on that activity.
Operations:Celestica generates about $3.27b from Advanced Technology Solutions and around $12.32b from Connectivity & Cloud Solutions, highlighting the scale of its cloud-focused services.
Market Cap:CA$62.78b
Celestica slots into the Undervalued Tech theme because its cloud and AI focused hardware platforms sit directly in the build out of data center infrastructure, yet the wider business still spans industrial, aerospace, and HealthTech manufacturing that can temper that exposure.
"Accelerated demand for advanced networking and AI infrastructure by hyperscaler customers is driving rapid growth in Celestica's CCS segment, with multiple new 800G and upcoming 1.6T program ramps, supporting robust revenue expansion and greater operating leverage over the next 12 to 24 months."
The real question is how one shift in the mix of high bandwidth programs could ripple through Celestica's margins and contract visibility.
That margin ripple is exactly what the full story tackles. Read the full narrative for Celestica to see how Celestica's contracts and AI build out could reshape the risk reward.
CGI (TSX:GIB.A)
Overview:CGI delivers IT consulting, application and infrastructure modernization, and managed services that help global enterprises move legacy systems into cloud based environments.
Operations:CGI generates most of its revenue across Western and Southern Europe at about CA$3.0b and the U.S. commercial and state segment at roughly CA$2.5b, with additional multi billion contributions from U.S. federal, U.K. and Australia, Scandinavia, and Canada.
Market Cap:CA$20.73b
For the Undervalued Tech screen, CGI matters because its modernization and managed cloud work sits right in the flow of enterprise digital transformation, even though the wider group still spans consulting, business process services, and sector specific platforms.
"Rapid adoption of AI in mission critical systems, supported by CGI's advanced AI investments, AI-enabled software delivery life cycle and high client interest in AI advisory and integration, positions the company to capture higher value projects that can support revenue and potentially lift earnings quality over time."
The real tension is what happens to earnings quality if one assumption about how clients scale those AI heavy modernization deals fails to hold.
If that assumption on how clients scale AI projects is what you care about, read the full narrative for CGI to see where CGI's upside and execution risk may really sit.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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