Artificial intelligence (AI) has been the main theme of the markets in 2023. The entire year, companies betting big on AI have been rallying. Most of the momentum took place in the first half, but the trading in the second half has not been bearish; things have just been moving slower than they did in the early months of the year. In that period, ChatGPT was still new, and the hype surrounding the technology was palpable. Now that most people have used the app, its popularity seems to have waned, with three monthly traffic declines in a row. Still, chip companies like NVIDIA are making enough truck-sized piles of money in AI chips to keep people interested.
All of this leads us to an important question: Which Canadian companies are doing big things in AI?
There are several. Not all of them are necessarily reputed to be “AI companies” just yet, but they are using AI in various ways, and AI is becoming a bigger and bigger component of what they do over time. In this article, I will explore the spectrum of AI investment opportunities available in Canada.
Software companies
Software companies develop apps that have AI-powered features. One such company is Kinaxis (TSX:KXS). Kinaxis is a supply chain management software company that helps customers manage their supply chains. Supply chains are the processes that lead to the delivery of a product or service. They include raw materials, inventory, management processes, and customers.
Kinaxis Rapid Response lets customers access this data instantaneously. With the AI features that were recently added to Rapid Response, customers can also interpret and make use of the data nearly instantaneously. AI appears to have ignited a growth spurt in Kinaxis, which grew its revenue at 20% and its earnings at 358% year over year in the most recent quarter.
Another good example is Shopify (TSX:SHOP). Shopify is a Canadian e-commerce company that develops a platform businesses can use to sell their goods. It recently started using AI of the sort that ChatGPT runs on to help users create product descriptions. In the past, businesses had to spend copious amounts of time and money writing copy for their offerings. Now, with Shopify, they can simply enter a few basic facts about their product into a text input field and have a high-converting sales copy written in seconds.
Non-tech companies
Another category of AI company in Canada is “end-user” companies — that is, companies not traditionally thought of as tech companies that use AI in their operations. There are too many of these to count. Toronto-Dominion Bank has an AI research lab and has developed an AI-powered assistant for its mobile app. Canadian National Railway has partnered with Google Cloud to revamp its railway services and improve customer experiences. TD and CN aren’t normally thought of as tech companies. Nevertheless, their adoption of AI is very real.
Chip companies
Last but not least, we have chip companies. These develop the systems that AI runs on. Poet Technologies is one Canadian example of a chip company. It develops chips that integrate photonic and electronic systems in digital cameras. AI is rapidly being deployed in smartphone cameras, and Poet’s components are being used by industry-leading companies. So, it’s likely that this company’s optical breakthroughs will make their presence felt in the AI world one way or another.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
