Written by Amy Legate-Wolfe at The Motley Fool Canada
Investing in artificial intelligence (AI) stocks has become increasingly popular. Yet for Canadian investors looking for a stable, long-term opportunity, OpenText (TSX:OTEX) is an overlooked gem. While many AI-focused companies attract attention with their flashy innovations and speculative growth, OpenText has been steadily integrating AI into its enterprise software solutions, thus making it a reliable choice for those seeking long-term gains.
One of the key reasons OpenText stands out is its strategic approach to AI adoption. The AI stock’s upcoming Titanium X platform is expected to be a game-changer, integrating AI, cloud, and security into a seamless enterprise solution. With more businesses transitioning to multi-cloud environments, OpenText is positioning itself as a leader in helping organizations navigate this transformation. By providing AI-driven insights and automation, OpenText is making companies more resilient and efficient, reinforcing its long-term value as an investment.
Financially, OpenText has demonstrated resilience despite market fluctuations. In its latest earnings report for the second quarter of fiscal 2025, the AI stock reported $1.3 billion in revenue. While this represented a decline from the previous year due to the divestiture of its Application Modernization and Connectivity division, cloud revenues grew by 2.7% year-over-year. More importantly, the AI stock’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin stood at a solid 37.6%, reflecting strong profitability.
OpenText also posted a remarkable 510% increase in net income year-over-year, underscoring the effectiveness of its focus on efficiency and cash flow generation. This ability to maintain profitability while investing in AI and cloud expansion sets OpenText apart from more speculative tech stocks.
One of the most appealing aspects of OpenText as an AI investment is its commitment to returning value to shareholders. Unlike many high-growth AI stocks that reinvest all earnings into expansion, OpenText offers a dividend, thus making it an attractive option for investors who want exposure to AI without sacrificing passive income. The AI stock recently declared a quarterly dividend of $0.2625 per share, continuing its long-standing practice of rewarding shareholders. This makes OpenText one of the few AI-related stocks that provide a blend of both growth potential and income stability.
In addition to its strong fundamentals, OpenText has a proven track record of strategic acquisitions that have expanded its AI capabilities. The acquisition of Micro Focus, for instance, significantly strengthened its AI-driven data analytics and cloud offerings. With Titanium X set to launch later this year, OpenText is reinforcing its leadership in AI-powered enterprise software, thusly ensuring that it remains relevant as companies increasingly rely on AI for automation and data-driven decision-making.
