Tech’s January Bounce: 2 Canadian Stocks That Could Lead a 2026 Rebound

A January bounce is basically the market’s version of new year motivation. Investors tidy portfolios after December, fresh cash shows up, and beaten-down names can get a second look. That doesn’t mean up is guaranteed, but it does mean sentiment can change quickly. Canadian tech is a classic place where this shows up, as the sector is smaller and more mood-driven than banks or pipelines. If confidence returns, even a small spark can move prices. So, let’s look at two to watch.

OTEX

Open Text (TSX:OTEX) is often the kind of tech stock that rebounds quietly, not loudly. It sells enterprise software that helps businesses manage information, protect data, and run digital workflows. For a beginner, the appeal is that it has a real customer base and recurring revenue. The model is built to generate cash through a cycle, not just during boom times. It also has enough scale to matter when corporate spending steadies again.

What investors need to watch is whether the tech stock is stabilizing growth without giving up profitability. Open Text reported first-quarter fiscal 2026 results, and one widely circulated summary put revenue at about US$1.45 billion and described it as a modest year-over-year decline. That suggests customers are still cautious about new projects, a common hangover from years of higher rates. For long-term investors, the real test is whether margins and cash generation stay resilient while demand gradually improves over 2026. Strong cash flow is what turns a rebound into a hold.

Valuation is where Open Text can become interesting in a January rebound. Mature software companies tend to move when investors decide the bad news is already priced in. Then they reward small wins like steadier renewals, better cost control, or fewer surprises. The risk is that the tech stock can stay stuck if growth remains soft or if the company has to lean too hard on discounting to keep customers. Overall, Open Text can rebound, but it needs steady execution more than hype.

LSPD

Lightspeed Commerce (TSX:LSPD) is the more classic January bounce name, as it trades like a growth stock. It sells commerce and payments tools for retailers and hospitality businesses, so investors watch both demand and the company’s ability to scale profitably. This is not a dividend story, but a prove-it story. The upside comes when the market believes Lightspeed can keep improving the quality of its earnings while still growing, especially if risk appetite returns in early 2026.

Its latest update gave investors that kind of encouragement. In its second quarter of fiscal 2026, Lightspeed released results and raised its outlook for the full year. Guidance changes can be a catalyst on their own. It suggests management is seeing enough traction to be more confident about the months ahead, and it signals progress on the balance between growth and discipline. For a rebound move, that kind of message can be fuel when the market is already leaning optimistically in January.

That said, beginners need to respect the risks. Lightspeed can swing hard on macro headlines, competition, and any sign that merchants are tightening budgets. If rates stay higher than expected, growth names can lose their shine quickly. And without a dividend, you’re relying on price gains for your return. The flip side is that when sentiment improves, the same volatility can work in your favour, and the tech stock can move faster than steadier blue chips.

Bottom line

Put together, Open Text and Lightspeed can make sense as a Canadian tech stock rebound pairing, but only if you keep expectations grounded. Open Text is closer to a stability-and-cash story, where upside comes from steady progress and a valuation that can improve when investors relax. Lightspeed is a momentum-and-proof story, where upside comes from delivering on higher guidance and showing the business is genuinely trending healthier. If you’re a beginner, keep position sizes modest, diversify beyond tech, and be patient if the bounce takes time to materialize.

The post Tech’s January Bounce: 2 Canadian Stocks That Could Lead a 2026 Rebound appeared first on The Motley Fool Canada.

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More reading

• The January Effect Is Real: 5 Canadian Stocks That Could Pop First
• 1 Magnificent Canadian Stock Down 26% to Buy and Hold Forever
• 2 Buys and 1 Sell for Investors Worried About a Market Crash in 2026
• 3 Magnificent Canadian Growth Stocks I’m Buying in 2026
• Tech Stocks That Look Like Deals After the Recent Sell-Off

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