A Canadian Stock Poised for a Massive Comeback in 2026

If the software sector sell-off has you rattled, here is a name worth adding to your watchlist: CGI Inc. (TSX:GIB.A).

Valued at a market cap of $21.4 billion, CGI stock is down over 35% from its 52-week high, allowing you to buy the dip. The ongoing sell-off has also raised its dividend yield to 0.7%.

The Canadian tech stock is down from its 52-week high, not because the business is broken, but because investors are painting every IT company with the same “AI disruption” brush.

CGI is not a traditional software vendor. It is an IT services and consulting powerhouse with 50 years of operating history, a +95% client renewal rate, and a balance sheet built for exactly this kind of market environment.

This looks like a classic buy-the-dip opportunity.

The AI-powered sell-off is an opportunity

The broader software sector has been hammered in 2026. iShares Expanded Tech-Software Sector ETF is down about 27% from its recent high, deep into bear-market territory.

Investors are worried that AI can erode demand for traditional software licenses and IT workflows. However, CGI does not sell software subscriptions that AI could replace overnight.

The company manages complex IT environments, modernizes legacy systems, and helps governments and large enterprises figure out how to deploy AI in the real world.

• In the fiscal first quarter (Q1) of 2026 (ended in December), CGI reported revenue of $4.1 billion, an increase of 7.7% year over year.
• It reported $4.5 billion in bookings, ending Q1 with a book-to-bill ratio of 110%.
• On a trailing 12-month basis, total bookings reached nearly $18 billion, up 12% from the year before.
• With $31.3 billion in backlog, CGI offers significant revenue visibility for shareholders while driving bottom-line growth.

CGI’s board renewed its share-buyback program, authorizing the repurchase of up to 19 million shares through February 2027. The company spent $577 million on buybacks in Q1, and CFO Steve Perron explained: “At current share price levels, we expect to remain very active in our repurchase program.”

Is AI a tailwind for this TSX dividend stock?

CGI is selling AI adoption services to the world’s largest enterprises and governments.

The management noted that the pipeline of systems integration and consulting opportunities in advanced stages is up more than 40% year over year.

• Managed services bookings are up 16% on a trailing 12-month basis.
• The government pipeline alone is up 30% compared to this time last year.
• Approximately 40% of CGI’s consultants now have expertise in advanced AI, double the number from a year ago.
• The company recently signed multiyear go-to-market alliances with both Google Cloud and OpenAI to help enterprise clients deploy AI securely and at scale.

Analysts forecast the TSX stock to expand earnings from $8.95 per share in fiscal 2026 to $12.64 per share in 2030. If the tech stock is priced at 15 times forward earnings, which is similar to its 12-month average, it should gain 90% over the next 40 months.

CGI has navigated every major technology cycle for 50 years, from outsourcing to cloud to cybersecurity and now to AI. Each wave created more demand for what CGI does best: helping large, complex organizations modernize and operate their IT.

At 35% off its highs, with record cash flow, growing bookings, and management buying shares hand over fist, CGI is a top stock to own in March 2026.

The post A Canadian Stock Poised for a Massive Comeback in 2026 appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet and CGI. The Motley Fool has a disclosure policy.