Canadian technology stocks could be poised for broader gains in 2026, according to RBC, as software valuations begin to stabilize and earnings growth picks up. While Shopify (SHOP.TO) is still expected to lead the sector, the bank believes performance will become less concentrated than it was in 2025.
In a recent report, Paul Treiber, an analyst at RBC Dominion Securities Inc., noted that last year’s gains in the S&P/TSX Information Technology sub-sector were uneven.
“Even though the S&P/TSX Info-Tech sub-sector experienced solid returns in 2025, performance was bifurcated, as strong rallies at Shopify and Celestica (CLS.TO) offset underperformance among the vast majority of software stocks in our coverage,” Treiber said.
The Info-Tech sub-sector rose 23 per cent in 2025, lagging the broader S&P/TSX Composite Index, which gained 28 per cent. Only about half of the technology stocks tracked by RBC finished the year in positive territory. Many software names struggled as investors grew wary that artificial intelligence could disrupt traditional software business models and compress valuations.
RBC’s coverage includes companies such as Descartes Systems Group (DSG.TO), CGI (GIB-A.TO), VitalHub (VHI.TO), Enghouse Systems (ENGH.TO), and Lightspeed Commerce (LSPD.TO).
Looking ahead, Treiber expects those concerns to ease in 2026, leading to more widespread gains across the sector. He says much of the anxiety stemmed from the belief that AI could dramatically increase developer productivity—potentially enabling customers to build their own software. In his view, that risk has been overstated.
“Even with improved developer productivity from AI, new entrants and companies developing their own software would need to test and evaluate all workflows and use cases before deploying AI-generated software,” he said.
Treiber also points out that AI-driven productivity gains are likely to spur additional technology spending, not reduce it. Preparing for AI adoption often requires companies to upgrade legacy systems, break down data silos, and automate processes that have traditionally been handled manually—creating new opportunities for established software providers.
RBC expects these dynamics to support stronger financial performance across the sector. The firm forecasts that the median stock under its coverage will deliver 12 per cent year-over-year revenue growth and 19 per cent growth in adjusted EBITDA in the year ahead.
Shopify remains RBC’s top pick. The bank’s US$200 price target implies a potential 27 per cent return over the next 12 months, driven by continued market share gains, resilient consumer spending, and the rollout of new products—alongside a sustained premium valuation.
More broadly, Treiber says enterprise software companies with deep expertise in specific workflows and processes face the least risk of disruption.
“There are hundreds or thousands of workflows and use cases that software companies evaluate and iterate on when developing their own software,” he said. “Additionally, software companies incorporate feedback from their customers into their software.”
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