Everybody investing in the stock market had an idea that we would see some drastic shifts with Donald Trump taking office last month, but there was no way to predict what would transpire until it started happening. On February 1, President Donald Trump signed an executive order that imposed a 25% tariff on imported goods from America’s neighboring Canada and Mexico.
A tariff is essentially a tax on goods imported from another country. The goal of these tariffs is to make foreign goods less competitive in the marketplace by forcing an increase in costs. Canada’s exports to the U.S. account for around a fifth of its domestic Gross Domestic Product (GDP).
Even a 10% growth would have a negative impact on the Canadian economy, but a 25% hike increases the risk of sending the Canadian economy into a recession. The question is: Does this impact how Canadians should consider investing in technology stocks on the TSX? Perhaps not.
A Canadian photonics company
Succeeding in the tech space is all about being the first to innovate in a rapidly developing industry. The rise of artificial intelligence (AI) technology in recent years is accelerating this revolution. Nvidia, the California-based manufacturer of chips, is leading the space with a strong demand in the data center segment through its Graphics Processing Units (GPUs). However, it is not the only tech stock to consider.
Not many people might be talking about it right now, but photonics will be another interesting space to watch in the coming years. POET Technologies (TSXV:PTK) is likely going to change how microchips work with its chip-scale photonics.
We think of photonics for its application in transporting information through fibre optic cables. Light is an excellent medium to send information at literally the speed of light. However, POET Technologies is using the speed of light through interposer technology to become the bridge between photonics and electronics at the hardware and processing level.
The company is repositioning itself as an AI hardware company. The possibility of hardware costs being low while significantly increasing data transmission rates can be another disruptor in the AI and broader tech space. Right now, conventional semiconductor-based AI hardware is only getting more expensive. POET’s interposers don’t have the same limitations and can take the AI landscape to another level.
Early 2024 saw POET stock enter the limelight and enter a period of rapid growth on the stock market. As of this writing, the $259.68 million market capitalization stock trades for $7.08 per share, up by over 416% from its 52-week low.
Foolish takeaway
The company is making acquisitions and making more hardware deals right now. Stakeholders across the tech space are seeing the potential photonic chips have, and the company is leveraging the momentum. While it will likely take several more quarters of excellent performance for the company to break even, it has virtually no debt and plenty of cash to fund its operations.
If it is not already in your self-directed portfolio, you might want to consider adding it before it sees a rapid rise like the one many Nvidia investors missed out on.
