good morning. While the investment frenzy around AI has some investors sensing clear signs of a bubble, others argue that the demand is real. That discussion is the focus today. It also focuses on why we are dissatisfied with our southern friends.
first up
on the news
Stock exchange: The Canadian Securities Exchange is considering acquiring Cboe Canada in a potentially game-changing deal for the country’s capital markets.
Infrastructure: Ontario and Manitoba this week signed a draft agreement with the federal government to streamline review of major projects.
steel: The City of Ottawa plans to limit foreign steel imports and lower interprovincial rail fares to support Canadian industry.
IMO, chewing gum makes robots feel less intimidating.iStockPhoto/Getty Images
in focus
top of the pops
History doesn’t always repeat itself, but it follows a familiar pattern of booms and busts, writes The Globe’s Joe Castaldo in a look at the power of AI to shape the future. From railroads to electricity to the internet, each wave of revolutionary technology has arrived with great promise and great financial risk. Artificial intelligence will generate a faster and more focused investment rush, with associated risks of deeper downsides.
I spoke to Joe about how he reported on this story, about capital going after AI, and about the sharp disagreement over this end point.
Even without a major domestic AI company, is Canada’s sector indirectly linked to AI ramp-up?
Energy companies are benefiting from building AI. Remember, data centers require a lot of power, but because power is scarce, new capacity is needed. Natural gas is considered the fastest, cheapest, and cleanest way to provide that power until (and if?) nuclear power comes online.
Companies that export or produce natural gas in the U.S., where the data center boom is occurring, may see some upside. Celestica also had a wild ride. The Canadian manufacturer makes network switches and other equipment for data centers. The company’s stock price graph gives a good idea of where AI investor sentiment stands.
Where are ordinary Canadians actually exposed to the AI boom?
Canadians would be exposed to the risk through index funds and ETFs that track the U.S. market. The US tech giant, along with other AI-related companies, has recently made up a significant portion of the S&P 500. AI adjustments are likely to impact the index as a whole.
What’s the simplest way to explain why spending on AI is so huge, and why it might matter?
Significant spending is being done because it is believed that more data centers are needed to build more powerful and sophisticated AI models and support increased usage of the technology. In the case of Meta, the company is trying to develop “superintelligence,” or AI systems that are smarter than humans.
Public opinion among tech companies is that it’s better to overbuild than to underbuild. However, the economic benefits are not yet clear, which is a reason for concern. What would happen if superintelligence never arrived?
If this actually happens, what first signs will Canadians notice in the markets and economy? Are we already seeing them?
A decline in stock prices would be a clear sign. That’s happening to some extent now, despite Nvidia’s very positive earnings report last week. Some observers, including Michael Barry, have said: big short When a bubble deflates, the famous professor points out, stock prices lose momentum before the underlying investment spending is lost. Even if investor sentiment changes, NVIDIA may still see demand and report strong numbers.
What do the people you interviewed disagree with the most or agree with the most?
The most important question is: Is it a bubble or is it a bubble? And if a bubble does occur, how bad could it get? (Simply put, somewhere between a small shock and a recession.)
What unanswered questions continued to haunt you after you finished your report?
I’m sticking with the comparison to the dot-com bubble. While there are similarities in AI, there are also important differences. I don’t know if one outweighs the other. AI may really be different. I’m sure you’ll understand.
charting
Deteriorating situation in America
Since Donald Trump returned to the White House spewing anti-Canadian rhetoric, people are feeling frustrated with our southern neighbor in a way not seen since the last time Trump was president. Two-thirds of Canadians view the United States unfavorably, a sharp reversal from 10 years ago, when just a quarter felt that way.
Gold prices are plummeting. Barrick is supposed to be minting money, but that’s not actually the case. Gold prices are plummeting. Barrick is supposed to be minting money, but that’s not actually the case.
As for Barrick’s turmoil, board chairman John Thornton deserves just as much blame as the ousted CEO, writes Tim Kiladze.
attention
Other files we follow
In terms of numbers: Economists at TD Bank expect today’s key U.S. report to show the economy grew nearly 3% in the third quarter, driven largely by rising stock prices driving demand from higher-income households. Canada reported corporate profits contracted last quarter after two months of increases.
At the bell: Today’s notable gains include – No! Nothing. Now is a good day to ask whether you should exit the stock market, at least temporarily.
Beyond the horizon: The operator of the Toronto Stock Exchange expects a significant increase in stock market listings heading into 2026.
morning update
Global markets rose as weaker-than-expected U.S. economic data raised hopes that the Federal Reserve would cut interest rates next month.
Wall Street futures moved into positive territory as Canada’s major stock markets hit new record closing prices yesterday, with TSX futures following the rise in sentiment.
Overseas, the pan-European STOXX 600 index rose 0.44% in morning trading. Britain’s FTSE 100 index rose 0.26%, Germany’s DAX index rose 0.39% and France’s CAC 40 index rose 0.47%.
In Asia, Japan’s Nikkei Stock Average closed 1.85% higher and Hong Kong’s Hang Seng Index closed 0.13% higher.
The Canadian dollar traded at US$70.99.
