Among the many learnings of Warren Buffett was, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” Behind this statement was the strategy that your core portfolio should comprise stocks that you are sure will give you good returns for years to come. Some of Buffett’s top holdings are in no-brainer stocks, like Apple, Coca-Cola, and Bank of America. They are market leaders and are too important for the American economy.
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No-brainer buy-and-hold forever stocks
In Canada, you have Royal Bank of Canada, Enbridge, and Canadian Natural Resources, which are critical for Canada’s export-led economy. They have also generated stable returns to investors and could be considered for your core portfolio. These are established companies trading near their highs. But there is an up-and-coming Canadian stock that could become critical for the Canadian economy in the future.
Up-and-coming Canadian stock to buy and hold forever
The up-and-coming industry is artificial intelligence (AI). On one side, risk-averse investors are worried about an AI bubble, and their worries are genuine. Every new technology has undergone a bust cycle and then stable long-term growth. The 2000 dot.com bubble sent every internet company to sky-high valuations. The surge was so fast that the internet companies’ business model was not yet ready to monetize the power of the internet.
AI is facing a similar fate. Every tech company has adopted AI because it is trending. However, very few companies know how to derive value from their investment in AI infrastructure. Hive Digital Technologies (TSXV:HIVE) has cracked the code and is using its crypto mining data centers to provide high-performance computing (HPC) on the cloud through its BUZZ platform. It is working with companies looking to adopt AI by leasing them the required infrastructure.
Hive has partnered with Bell Canada for the latter’s AI Fabric facility. It aims to grow its BUZZ HPC business sevenfold from US$20 million in 2025 to $140 million in 2026, with about 80% gross margins. It will have to attract big companies to its BUZZ platform.
AI chip stocks have had their rally over the last two years. The next wave in the AI supply chain will likely come from AI infrastructure-as-a-service, as companies will have to justify their AI investments. Instead of pouring millions into AI infrastructure, leasing the infrastructure will gain popularity and drive revenue for companies like Hive.
You could consider holding this stock forever as its long-term growth prospects seem bright.
Why is this up-and-coming Canadian stock down 56%
Despite the AI monetization, Hive’s stock has more than halved since October as the company’s core business is still Bitcoin mining. Bitcoin’s price has dipped as uncertainty from the U.S. government shutdown made investors apprehensive about risky investments.
The volatility from Bitcoin prices will gradually fade as the profit contribution from BUZZ HPC computing increases. Until then, you may want to consider buying Hive stock in the $3-$ 4.50 price range.
Another cause for the share price dip is Hive’s plan to sell around US$300 million worth of common shares to raise capital. Although the purpose for capital raising is not stated, it will likely be used to expand the AI infrastructure. It has recently partnered with Dell Technologies to use the latter’s servers for its BUZZ platform.
As AI adoption picks up, computing power and carbon credits could become revenue earners for Hive, as it powers its data centre with renewable energy.
