![\"AI](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/02\/6d4e3d9e68084e6e3d324b6cb7735ab3.jpeg\")
Source: Getty Images <\/p>\n Source: Getty Images <\/p>\n
Written by Joey Frenette<\/a> at The Motley Fool Canada<\/p>\n The artificial intelligence (AI)<\/a> boom has been going on for quite a while now, and while it\u2019s been several years since ChatGPT took the world by storm (can you believe it\u2019s been more than three years now since OpenAI gave us that profound sense of awe?), the AI landscape continues to move at a ridiculous pace. And, as always, there are going to be huge winners and losers when the tides move so quickly. Arguably, we\u2019ve already had more than a handful of massive, multi-bagger winners, especially in the realm of hardware (semiconductors specifically).<\/p>\n Of course, there have been other data centre stocks that have risen to the occasion, as well as some unforeseen plays. And while there are still plenty of winners that will rise out of this generational shift in tech, we\u2019ve begun to witness some serious losers to start off the new year. As you not doubt have probably guessed, I\u2019m talking about the software companies that have fallen into a severe bear market. Undoubtedly, the software companies that sell seats have had AI pull the rug from underneath them.<\/p>\n Even the software titans that do pivot and adapt in the agentic AI age might have other struggles as they potentially cannibalize their own businesses. Either way, it\u2019s a tough place to be in software right now, especially for the legacy names that aren\u2019t what you\u2019d call \u201cAI-native.\u201d At some point, I think the sell-off will be overdone, but I don\u2019t think we\u2019re there yet, and I don\u2019t want to be a hero by looking to not only buy the dip, but the crash.<\/p>\n Personally, I\u2019d be more comfortable waiting for firms to show that they\u2019re adopting AI in a way that drives sales growth or even a bit of margin expansion. In any case, capital expenditures that are through the roof are the name of the game for the AI innovators.<\/p>\n If you\u2019re a bear on AI, the software names might be an undervalued steal right here. But, if you believe in AI and don\u2019t see it as in a bubble, I\u2019d be cautious with the latest software sell-off, as the true long-term implications may not yet be fully understood. It feels like moats were narrowed overnight for the software plays.<\/p>\n With Anthropic recently pulling the curtain on a new AI tool that helps legal professionals, it should be no mystery that legal software plays were in the blast zone on Tuesday\u2019s session.<\/p>\n Thomson Reuters (TSX:TRI<\/a>) took a hit to the chin, falling close to 16% in a single session. Indeed, there\u2019s fear that AI is coming for the firm\u2019s lunch. Could this really be curtains for legal software, though? I guess time will tell, but there\u2019s already so much damage done to shares of TRI. Legal software is a piece of the pie, but investors<\/a> don\u2019t seem to be willing to hang around to see what happens next.<\/p>\n With the stock down around 56% from its peak already, I think there\u2019s an opportunity to get in at a reasonable 23.6 times trailing price to earnings (P\/E). Still, time will tell how Claude and other AI innovators navigate new market verticals next. It\u2019s a scary time for a software investor, but an exciting one for AI investors, even if high capital expenditures remain a worry for a while longer.<\/p>\n Personally, I think Alphabet (NASDAQ:GOOGL<\/a>)(NASDAQ:GOOG<\/a>) stock is the perfect AI play. It\u2019s got Gemini and could bring more pain to some of the incumbent software names in the coming year. Though it\u2019s hard to tell what else Google has up its sleeves, I still think the stock is worth picking up, especially if you\u2019re a big believer in Google DeepMind, which is the research-focused subsidiary that could keep Google leading the AI race for the long run.<\/p>\n Just how much longer will AI eat software\u2019s lunch? It\u2019s hard to tell. Either way, I\u2019d much rather be in the disruptor, with Alphabet at a richer price, than in a software firm at a \u201cbargain.\u201d<\/p>\n The post The AI Boom Everyone\u2019s Talking About\u2014and How Canadians Can Profit<\/a> appeared first on The Motley Fool Canada<\/a>.<\/p>\n Before you buy stock in Alphabet, consider this:<\/p>\n The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026\u2026 and Alphabet wasn\u2019t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.<\/p>\n Consider MercadoLibre, which we first recommended on January 8, 2014 \u2026 if you invested $1,000 in the \u201ceBay of Latin America\u201d at the time of our recommendation, you\u2019d have $21,827.88!*<\/p>\n Now, it\u2019s worth noting Stock Advisor Canada\u2019s total average return is 102%* \u2013 a market-crushing outperformance compared to 81%* for the S&P\/TSX Composite Index. Don\u2019t miss out on our top 10 stocks, available when you join our mailing list!<\/p>\n Get the 10 stocks instantly<\/a><\/p>\n * Returns as of January 15th, 2026<\/p>\n More reading<\/p>\n Fool contributor Joey Frenette<\/a> has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet. The Motley Fool has a disclosure policy<\/a>.<\/p>\n 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Source: Getty Images Written by Joey Frenette at The Motley Fool Canada The artificial intelligence (AI) boom has…\n","protected":false},"author":2,"featured_media":455439,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,72019,276,277,49,48,19514,1836,186919,186920,61],"class_list":{"0":"post-455438","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-revolution","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-ca","13":"tag-canada","14":"tag-legal-software","15":"tag-motley-fool","16":"tag-software-companies","17":"tag-software-names","18":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/455438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=455438"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/455438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/455439"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=455438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=455438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=455438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}