1 Magnificent AI Stock Down 21% That Could Transform Your Portfolio

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14 hours ago

Written by Jitendra Parashar at The Motley Fool Canada
Artificial Intelligence (AI) is everywhere these days. You see it in your smartphone, your online shopping suggestions, and even behind the scenes in major industries like logistics and healthcare. While some AI stocks get all the buzz, others are busy developing scalable, real-world solutions.
And in 2025, one Canadian AI-focused stock, Descartes Systems Group (TSX:DSG), has caught my eye because it's doing just that. Although DSG stock is currently down 21% from its 52-week highs, I actually think that's what makes it so interesting right now. Let me explain why this under-the-radar AI stock could become a game-changer in your portfolio over the long run.
Despite being down from its highs, Descartes Systems could offer a lot more than meets the eye. Based in Waterloo, this Canadian company specializes in logistics and supply chain software, offering AI-powered tools that help businesses optimize shipping, track deliveries, automate customs filings, and improve compliance.
Over the past 12 months, DSG stock has risen 2%, but it's still down 21% from its 52-week high. As a result, this AI stock currently trades at $140.53 per share with a market cap of $12.1 billion.
Despite economic uncertainty in global logistics, Descartes delivered double-digit revenue growth in its latest earnings. For the first quarter of its fiscal 2026 (ended in April 2025), the company's revenue rose by 12% YoY (year-over-year) to US$168.7 million. Most of that growth came from its high-margin services business, which made up nearly 93% of its total revenue. That shows Descartes' solid customer retention and growing demand for its services even in a softer trade environment.
On the profitability side, the tech firm's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed by 12% YoY to US$75.1 million while its net profit inched up by 4% to US$36.2 million. However, higher restructuring costs and some seasonal softness affected its sequential growth. Still, Descartes finished the quarter with over US$176 million in cash, reflecting strong liquidity.
Where Descartes really sets itself apart is in how it's applying AI to solve real-world logistics problems. From using machine learning to improve delivery times to automatically refining its route optimization with past data, its AI-powered system is already delivering results.
Its Route Planner AI Advisor platform uses machine learning to suggest optimal configurations for each customer's delivery network, which helps reduce the guesswork and manual inputs. It even fine-tunes performance by factoring in real GPS data, vehicle type, traffic patterns, and territory conditions.
Moreover, in global trade intelligence, Descartes has rolled out AI-powered tools that automate screening, classification, and risk assessment in cross-border shipping. These are the areas that are only getting more complex due to shifting global trade policies and sanctions.
The market may be chasing more glamorous AI stocks right now, but Descartes is truly building solid long-term value in the background. With a resilient recurring revenue base, ongoing innovation, and a stock price still 21% below its recent peak, this could be an amazing opportunity for long-term investors to buy this magnificent AI stock at a bargain.
The post 1 Magnificent AI Stock Down 21% That Could Transform Your Portfolio appeared first on The Motley Fool Canada.
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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group. The Motley Fool has a disclosure policy.
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