The AI revolution is coming to Canada too, with the great AI data centre buildout kicking off and a number of firms looking to invest in the cause.
Undoubtedly, it might be a wise idea to stick with the U.S. cloud. hyperscalers over the near- to medium-term, but, over time, I do think there’s a strong case for having domestic AI compute as well, especially once the costs of building look to come down or, at the very least, become a bit better balanced with the monetization potential of the technology.
A lot of discussion has surrounded the CapEx and unknown ROI to be produced from next-generation AI technologies.
Either way, I do think that doing some building (it doesn’t have to be at the expense of balance sheet health) is a wise move. Whether it’s the telecoms pivoting towards AI compute projects or firms making good use of frontier models run on hyperscaler clouds, I do think that many Canadian investors might not realize that the AI boom has already arrived in Canada, just not to the same extent as in the U.S.
With Meta Platforms (NASDAQ: META) announcing a massive AI data centre in Alberta, perhaps the buildout could accelerate in Canada in a way that few expect. Whether it’s hyperscalers building in Canada or a local firm looking to set up shop, there might soon be no hiding from the AI revolution, even if you’re an investor in TSX Index funds.
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Celestica
In this piece, we’ll look at a rising star in the Canadian AI scene, Celestica (TSX: CLS), a company that rose seemingly out of nowhere in the past couple of years. The company shifted gears from contract manufacturing (a commoditized service) to building one of the widest economic moats for itself in all of tech. With the firm on the cutting edge of networking infrastructure and custom AI racks, perhaps Celestica might be in for even more hyper-growth as it expands its dealings with the hyperscalers south of the border.
Indeed, the great AI buildout isn’t just going to need more GPUs, CPUs, or high-bandwidth memory (HBM); it’s going to need high-performance switches, racks, cooling, power, connectivity, and everything in between. Either way, Celestica has stepped up in a big-time way, and the results? They really do speak for themselves, with shares up more than 582% in two years or 3,932% in five years. The lesser-known mid-cap has risen up the market cap rankings and is now worth north of $50 billion.
Celestica is on the TSX map now, and in the second quarter, I do think that there’s more performance up its sleeve as the firm ramps up its top-tier switches while delivering custom racks and winning new business that could help growth accelerate faster than even management’s upbeat guide (over 65% growth) for next year.
What’s most impressive about Celestica is that it spotted the opportunity and ran towards where the puck was going next. It wasn’t merely standing in one spot hoping for the best. Given this, I’d not sleep on the firm as the AI revolution evolves in unexpected ways. Odds are that Celestica will pivot accordingly for whatever the boom holds next.
