Step Aside, Nvidia: This AI Stock is the Real Deal for Canadians in the Know

Nvidia (NASDAQ:NVDA) made artificial intelligence (AI) feel like a one-stock market, but the best gains often hide in the supply chain behind the superstar. When you look beyond Nvidia stock, watch three things. First, find a company that sits in the flow of AI spending, not a side quest. Second, demand real profits and real cash, because AI buzz fades fast when budgets tighten. Third, check pricing power, because customers negotiate hard once supply catches up.

Then stress-test customer concentration, cycle risk, and guidance discipline, because hype can move a stock, but numbers keep it moving. Finally, compare valuations and look for a moat that survives a price war, not a hot product cycle. So let’s look at one I’d consider over Nvidia stock, and why.

NVDA

Nvidia sells the brains of modern AI. It designs graphics processing units (GPU) and networking gear that run training and inference workloads inside the world’s biggest data centres. It pairs that hardware with software tools that developers rely on every day. It also pushes full platforms, from interconnect to systems, so customers can scale faster with fewer headaches. That mix turns Nvidia into a toll booth on the AI highway, which explains why the stock commands so much attention in Canada and everywhere else.

The latest earnings report showed why investors still crowd into it. Nvidia delivered revenue of US$57 billion in the third quarter of fiscal 2026, and it posted GAAP diluted earnings per share (EPS) of US$1.30. The data-centre segment generated US$51.2 billion of revenue, which highlights where the growth engine lives.

Now the stock must outrun its own expectations. Management guided for fourth-quarter revenue of about US$65 billion, so the growth story still points up. But valuation already bakes in a lot of good news. Nvidia stock currently trades at around 47 times earnings, so investors pay today for years of clean execution. That can work, but it leaves little room for a wobble in cloud budgets, tougher export rules, or a competitor that closes the gap in performance per watt.

CLS

Celestica (TSX:CLS) gives Canadians a different angle on the same AI boom. It builds and integrates the physical hardware that data centres need, including high-speed connectivity and server platforms, plus the boring but vital pieces that keep racks stable, cool, and powered. It earns its keep through engineering support, supply work, and flawless delivery when customers ramp fast. This company rarely lands on magazine covers, yet hyperscalers still need it when they expand capacity.

Recent results proved that the demand looks real. Celestica delivered fourth-quarter 2025 revenue of US$3.7 billion, and it produced adjusted EPS of US$1.89. It also generated US$458 million of free cash flow in 2025, which matters because factories run on cash, not vibes.

The forward picture looks aggressive, and that sets up both upside and risk. Management pointed to 2026 revenue of about US$17 billion and adjusted EPS of about US$8.75, plus a free-cash-flow target around US$500 million, while it ramps spending to add capacity. The market already rewards that plan, with the stock trading at 39 times earnings and a $45.9 billion market cap. Therefore, the stock needs continued execution, and a customer pause or cost slip can sting.

Bottom line

So why call Celestica the better buy than Nvidia stock right now? Nvidia stock can keep winning, but the stock already sits at the centre of the AI trade, so it needs near-perfect demand to stay exciting. Celestica ties directly to the build-out phase of AI, when companies buy racks, cables, and systems in bulk, not just chips. It also gives Canadians a home-market way to play AI hardware without paying for Nvidia stock’s dominance twice.

The risk stays real, especially with big customer concentration, but the guidance reset and cash generation leave room for upside when sentiment turns. If you want a stock that can ride AI without needing every headline to stay perfect, this one fits.

The post Step Aside, Nvidia: This AI Stock is the Real Deal for Canadians in the Know appeared first on The Motley Fool Canada.

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More reading

• Got $3,000? 2 Monster Growth Stocks to Buy Right Now Without Hesitation
• Momentum Is High, and These 3 Stocks Could Benefit the Most in 2026
• The Only 3 Stocks I’d Consider Buying in February 2026
• This AI Stock is the Real Deal for Canadian Investors
• 2 Canadian AI Stocks Poised for Significant Gains

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Celestica and Nvidia. The Motley Fool has a disclosure policy.