2026 is the year of artificial intelligence (AI) and energy, and your Tax-Free Savings Account (TFSA) strategy should place the portfolio that invests in both against and in favour of rising AI and energy stock valuations.
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Should you buy stocks with lofty valuations?
SpaceX debuted on the stock market, while Anthropic and OpenAI will soon follow with their initial public offerings (IPOs), making AI a competitive sector. Thus, it is no surprise that the few good AI chip stocks with lofty valuations are feeling the heat of competition and correcting aggressively. In the meantime, geopolitical tensions are keeping energy prices stressed. However, such high prices can’t last, as these hikes aren’t due to excess demand but to a logistics bottleneck. If the 1980s oil crisis resurfaces, energy stocks could crash if customers adopt alternatives to oil and gas.
If these risks materialize, AI chip and energy stocks may not return to their current highs for decades. In such uncertainty, your TFSA strategy should be to invest both in favour of, as well as against, the trend.
Buying into the 2026 trend through a TFSA
Buying into the trend will give you exposure to any further upside left in the trend. A lucrative way to invest in AI is through the iShares NASDAQ 100 Index ETF (CAD-Hedged) (TSXX:XQQ). The ETF replicates the Nasdaq 100 Index, which includes the entire AI supply chain from semiconductor to data centre companies to AI applications. Even Canadian tech companies growing at a faster rate have listed on the Nasdaq.
Anthropic and OpenAI will also list on Nasdaq after their IPO, giving you exposure not only to the AI supply chain but also to other emerging technologies like space exploration and satellite communication.
The XQQ ETF will charge an annual management expense ratio (MER) of 0.39% on your portfolio value. If you invest $10,000, $39 will go towards MER. If your $10,000 becomes $20,000 in the fifth year, $78 will go towards MER. The ETF’s 20% average annual growth rate makes 0.39% a small price to pay for such strong returns. Riding the AI rally, the ETF has already surged 30% from its March dip. If this rally continues, you can benefit from it even if the AI rally shifts from chip stocks to pure-play AI applications.
Buying against the trend and into defensive stocks
On one hand, you are investing in the trend. On the other hand, you should consider investing in defensive stocks if the AI and energy bubbles burst. The growing uncertainty makes gold stocks a lucrative investment. In a normal economic scenario, gold stocks would only command 2–3% of your portfolio.
Lundin Gold (TSX: LUG) is a good TFSA investment for the next two years as gold prices fluctuate. Central banks worldwide are buying gold at an accelerated rate to build a sizeable gold reserve as the credit rating of US Treasury bonds falls. Gold prices continue to trade above $4,300 after crossing $5,300 in January to March 2026. Energy shocks, an AI bubble burst, or falling interest rates cannot be ruled out, and you cannot tell if these risks will even materialize. Consider Lundin Gold as insurance against these risks.
Lundin Gold has one of the lowest all-in sustaining costs (AISC), zero debt, and a dividend policy that gives a bonus dividend on free cash flow above $300 million. All this makes it a better gold stock to buy in a TFSA, as its 6.4% dividend yield will give you tax-free payouts.
The 2026 TFSA strategy
Tech stocks have soared to levels at which investors are questioning valuations. AI is being tested for returns before it asks for more funds. Investing is about taking calculated risks and not going full-blown into one stock in which your wealth depends on the success of a few, rather than the success of the trend at large. The TFSA’s unique benefit of making your investment income and gains tax-free makes it an ideal vehicle to buy high-growth stocks and book profits on every upcycle.
