The U.S. technology sector was hot in 2023, Canada’s was hotter.

An investor frenzy for artificial intelligence stocks propelled U.S. tech-heavy benchmarks to market-besting returns this year. But tech stocks in Canada’s S&P/TSX Composite are poised to top them all, soaring roughly 70 per cent, as those in the S&P 500 Index and the Nasdaq 100 notched less than 60 per cent gains.

Toronto’s tech sector also beat out comparable gauges in Germany, the U.K., France, Japan, Korea, Australia and China, to post what CIBC World Markets has called “the best performance globally among technology peers.”

CANADIAN TECH INDEX BEATS U.S. GAUGE

Tech rebounded from one of its worst years in over a decade. U.S. stocks were led by a triple-digit rally in the Magnificent Seven, further fueled by signs the Federal Reserve was ready to start paring back from its highest interest rate target in decades.

In Canada, Celestica Inc., a maker of equipment to power AI and e-commerce giant Shopify Inc. were the triple-digit gainers. Shopify — once dubbed “Amazon Junior” — was bouncing back from its worst annual rout since going public.

“One year’s dogs tend to be the next year’s stars,” Jeff Mo, a portfolio manager at Mawer Investment Management, said by phone, noting tech “was the dog sector in 2022.” Indeed, the Canadian tech stocks fell 52 per cent in 2022, far worse than the 24 per cent drop experienced by those in the S&P 500.

And there’s room for improvement. While the U.S. tech stock benchmarks set all-time highs on Thursday those in the S&P/TSX Composite remain roughly 30 per cent away from a record.

Analysts aren’t expecting a repeat of 2023’s returns and estimates suggest there’s more gains to be had in the US next year. But their predictions suggest only one stock across the gauges is expected to jump more than 40 per cent in 2024 — Ottawa-based supply-chain planning software firm Kinaxis Inc.

“Despite the tech sector’s strong year, a number of names within our coverage universe look relatively attractive from a valuation perspective, trading below five-year averages,” CIBC analysts led by Giorgia Anton wrote in a Dec. 15 note to clients.

The bank recommended a handful of smaller Canadian tech companies, including Kinaxis, fintech firm Nuvei Corp., as well as Docebo Inc.