Software stocks picked up momentum in the latest earnings season, which began in late July. Microsoft and Amazon reported strong revenue and earnings growth in cloud and artificial intelligence (AI). Riding the momentum rally, Constellation Software (TSX:CSU) stock surged 28.8% from July 23, 2026, onwards, but pulled back 6.8% after reporting its second-quarter earnings on August 12.

The long-term growth stock that has compounded the wealth of its loyal shareholders saw its valuation halve after the sudden exit of its founder, Mark Leonard, in July 2025. Can you judge a long-term growth stock like Constellation from just a single quarter of earnings? Not exactly.

Why did Constellation Software stock fall 6.8% after earnings?

Constellation saw a 17% year-over-year increase in revenue, a 20% increase in operating expenses, and a 57% increase in free cash flow (FCF) in the second quarter of 2026. Unlike other operating companies, Constellation’s bottom-line growth is higher because of the nature of its business.

Constellation Software operates as a private equity firm for vertical-specific software (VSS) companies that enjoy sticky and recurring cash flow from maintenance services. It acquires these companies, improves their operational efficiency and profitability while allowing them to work independently. In return, it gets higher earnings per share (EPS) and free cash flow available to shareholders, which it uses to buy more VSS companies.

Constellation’s strong double-digit EPS and FCF growth is fuelled by acquisitions instead of organic growth. This is because Constellation acquires mature companies with niche cash flow. It acquires these companies from individual founders, private equity (PE) portfolio managers, and carve-outs from large companies. Constellation offers them an exit opportunity by acquiring their company at a discount.

Despite knowing that FCF and EPS growth are key growth drivers, investors discounted Constellation stock for slower organic growth from large acquisitions.

Is Constellation Software a good stock to buy now?

The current dip is a good opportunity to buy Constellation stock. It can be a good diversification for your portfolio as it gives you exposure to a different asset class. Private equity firms need patient capital to identify companies that have scope to improve profitability or turn around losses, acquire them at good prices, and generate returns.

Constellation has converted private equity into ongoing operations, whereby it is self-funding new acquisitions from the FCF from previous acquisitions. The higher the FCF, the more money it has to make acquisitions. Earlier, it acquired small companies in the range of $5–$10 million. Now it is targeting companies worth $100 million and above. The larger companies are more complex to manage and generate returns.

Most of the companies it acquires are niche companies that do not expand or grow revenue much. Not all software companies are Microsoft or Amazon that need widespread adoption to scale operations. Most software companies are like Springer-Miller Systems, which offers hospitality management systems to hotels, resorts, and spas. The owner sells their stake to Constellation. The acquired company continues to operate as usual with the same employees, with a tweak in the management approach towards profitability.

Constellation’s dip comes as the shift to larger acquisitions is dragging returns. But once the turnaround of portfolio companies picks up momentum, its share price could surge.

The AI opportunity and risk

Another core reason behind the halving of Constellation’s share price in the last 12 months was AI uncertainty. The fear of AI replacing software jobs pulled down all software stocks. Even Constellation kept an eye on the AI opportunity and how to pursue it.

Mark Miller talked about Constellation’s AI approach in detail at the second-quarter earnings call. The company is using AI internally and for clients. Its operating companies are using powerful AI tools to offer AI applications to its clients. However, selling AI products is different than developing them. Customers should know what is possible and be willing to shell out extra for AI.

Constellation’s decentralized AI approach helps its AI strategy to be flexible and diversified. It can easily dispose of strategies that didn’t work and unlock any potential benefit. Constellation has not yet disclosed the AI expense but is working towards reducing management.

The post Down 6.8% After Earnings, Is Constellation Software a Good Stock to Buy Now? appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Constellation Software. The Motley Fool recommends Amazon and Microsoft. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

The TSX Index is charging, with a 4.4% rally in the first half of August. Leading this charge are technology stocks, with Shopify and Constellation Software (TSX:CSU) seeing a sharp rally of 20–30%. After tepid growth in May and June, artificial intelligence (AI) momentum is picking up again, as the latest earnings show positive revenue and earnings growth from AI. This time, the stocks to buy are Constellation and Celestica (TSX:CLS).

The two TSX stocks to watch as they ride the next AI rally

Constellation Software

AI and Constellation Software are not exactly the right pair, but hear this. In its latest earnings call, Constellation Software chief executive officer Mark Miller said that the company is experimenting with various AI tools, trying to show clients what is possible. The decision to give that extra buck for AI or not is the client’s call. His exact words were, “You can build products fast, but selling them is a whole other thing.”

This AI experiment can have two outcomes:

• Either the AI experiment fails and mission-critical clients stick to legacy software. That means Constellation’s recurring cash flow from maintenance will continue. This is a high possibility in the government, healthcare, and banking sectors, where clients are concerned about adopting AI and the cloud.
• Or the experiment succeeds, and clients pay for AI solutions. That will boost Constellation’s organic growth. So far, AI is at an experimental stage, and it is too early to say if clients are willing to pay.

Unlike other software companies which have a single AI at its center, Constellation’s AI strategy is decentralized. Its operating companies specializing in their respective verticals are testing AI at their level. This reduces concentration risk and makes AI adoption flexible. In either case, Constellation will stand to win.

I am bullish on Constellation stock because it will benefit from either scenario: an AI bubble burst or AI proliferation.

How to value this TSX stock

Most investors make the mistake of valuing Constellation like a regular software stock – on its revenue growth rate. It should be valued as a late-stage private equity firm, which focuses on holding cash-generating assets for the long term. They buy software companies with good cash flow at a bargain price using cash. Most owners sell their companies at a discount as they are retiring, and finding buyers for a private company is tough. Constellation lets the software company operate independently while extending management support to improve operating efficiency. It aims to increase cash flow, which it can reinvest to buy another company.

Hence, the right way to value Constellation is through the price-to-earnings (P/E) ratio. The stock is trading at an attractive valuation of 19 times its forward  P/E ratio. Considering a 57% earnings per share (EPS) growth rate, it has strong growth potential.

Celestica

Another TSX stock worth watching or holding now is Celestica, as it sees orders from the Enterprise segment materialize. This is the segment that caters to AI compute for hyperscalers and has higher margins. You may see a shift in the income statement with profits growing faster than revenue. It has guided a 190% year-over-year increase in Enterprise revenue in the third quarter of 2026.

Celestica has even revised its 2026 guidance for adjusted EPS from $10.15 to $11.30 and free cash flow from $500 million to $600 million. The stock is trading at 27.7 times its forward P/E ratio, which is a reasonable valuation. However, any earnings beat may send the stock to the next growth cycle. What makes me confident about Celestica’s long-term growth is management’s outlook for 2027, where it expects accelerated revenue growth compared to 2026. Management is even raising $3 billion in equity capital for capacity expansion and working capital needs to meet long-term demand.

How to value this TSX stock

The right way to value Celestica is using the revenue growth rate. It is a third-party manufacturer that has expanded to an original design manufacturer. I won’t be surprised if Celestica uses capex to expand its product line beyond Ethernet switches and storage devices to cater to AI infrastructure demand.

The post The TSX Is Charging: Here Are 2 Stocks I’m Watching appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Constellation Software and Shopify. The Motley Fool recommends Celestica. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

Every new data centre has an electricity problem to solve. Thousands of servers could consume enormous amounts of power, and all of that electricity has to be transformed, distributed, and managed reliably before a single artificial intelligence (AI) model or cloud application can run.

This trend is opening new opportunities in overlooked areas of the data centre supply chain beyond semiconductors. One Canadian manufacturer, Hammond Power Solutions (TSX:HPS.A), is already seeing the effect of that demand in its order book and financial results.

In this article, I’ll explain how this Canadian company could profit from the data centre boom by supplying the critical power equipment these facilities cannot operate without.

Hammond Power Solutions stock

Based in Guelph, Hammond Power Solutions manufactures dry-type transformers, power quality equipment, magnetics, and power conversion systems that support electrical distribution networks. Its products serve several industries, including AI data centres, mining, oil and gas, commercial construction, and wind power generation.

As of August 12, Hammond stock closed at $262.70 per share, giving the company a market cap of $2.4 billion. Despite recent volatility, the shares have soared around 100% over the last year and 65% year-to-date. However, HPS.A stock has pulled back 22% in three months and now trades 28.1% below its 52-week high. At the current level, the stock also offers a modest 0.4% annualized dividend yield.

Despite this recent weakness, the great part about Hammond’s long-term outlook is its rapidly expanding business as data centre investment drives stronger product demand.

Data centre demand is powering growth

The connection to Hammond’s growth was clear in its recently released second-quarter results, when rising AI data centre shipments helped it deliver record sales.

The company’s second-quarter sales surged 44.7% year-over-year (YoY) to a record $324.8 million. Its U.S. and Mexico sales jumped 73% YoY to $272.7 million, driven largely by higher data centre shipments, improving industrial demand, and better price realization. On the flip side, its Canadian sales fell 23.7% YoY to $44.7 million, partly due to the timing of large custom projects and softer market conditions.

On the brighter side, Hammond’s gross margin improved to 31.5% last quarter from 30.7% a year ago. Previous pricing actions, a higher custom product mix, operational improvements, and better operating leverage from its new Mexican facility supported better profitability.

The Canadian manufacturer’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 59.4% YoY to $53.2 million. Also, its adjusted earnings jumped to $2.76 from $1.72 per share.

Why the data centre opportunity could get bigger

For investors trying to profit from the data centre boom, Hammond’s huge order backlog makes its growth outlook even more appealing. The company’s second-quarter backlog was 96.9% higher than a year ago, primarily because of large project orders driven by AI data centre activity. Although its shipments exceeded new order bookings during the quarter, the backlog remained at significant levels. This should help Hammond keep its expanded manufacturing capacity busy while improving lead times and responsiveness to customers.

Along with that, its expanded manufacturing footprint is helping the business serve growing U.S. demand more effectively. Hammond’s new Mexican facility is already improving operating leverage. In June 2026, the company also completed the acquisition of AEG Power Solutions. Since the transaction closed near the end of the quarter, no AEG revenue or operating costs were included in the second-quarter results.

Put it all together and Hammond has a clear way to benefit from rising investment in AI data centre power infrastructure, making it an attractive Canadian growth stock to consider after its recent pullback.

The post Here’s How This Canadian Company Could Profit From the Data Centre Boom appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.

When we talk about artificial intelligence (AI), the first names that pop up are Meta, Amazon, and Google. They are the hyperscalers pouring billions into AI. A report by Goldman Sachs Research estimates AI-related investment worldwide to touch $1 trillion in 2026, including $581 billion in the US. It expects AI capital spending as a percentage of U.S. gross domestic product (GDP) to increase from 1.8% in 2026 to 2.8% in 2028. These AI infrastructure builders are contributing to the country’s GDP.

Why do AI infrastructure builders matter?

AI investment is initiated by hyperscalers and network infrastructure companies. AI is a five-layer stack, as Nvidia puts it. The base layer is energy, followed by chips, infrastructure, models, and applications. Each layer presents ample growth opportunity for investors and brings the world one step closer to AI adoption.

Bell Canada AI fabric

In Canada, BCE (TSX:BCE) is building Bell AI fabric as part of sovereign AI. While Canada doesn’t have a hyperscaler, it has a vast fibre network infrastructure. Bell is building a full-stack AI on top of its fibre network. The fabric will include data centre infrastructure, software, cloud capabilities, professional services, and a partner ecosystem.

The first big loop of the Bell AI fabric is its $1.7 billion, 300-megawatt AI data centre in Sherwood, Saskatchewan. It expects the data center to generate $500 million in annual revenue and $400 million in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) on a run-rate basis by the end of 2027. Bell expects this revenue to grow 2.5% to 4.5% and EBITDA to grow 3% to 4% through 2028.

To build this infrastructure, BCE has partnered with:

• Bird Construction (TSX:BDT) to construct the data centre building.
• Celestica (TSX:CLS) for hardware solutions, such as Ethernet switches, storage, rack integration, thermal management and power infrastructure.
• Hive Digital Technologies (TSX:HIVE) to build an AI factory from Nvidia’s graphics processing units (GPUs).

Three Canadian firms participating in AI infrastructure development

Hive Digital Technologies

Among the three partners of Bell AI fabric, two are raising equity financing to support expansion. Hive has been raising money from a private offering of 0% Exchangeable senior notes. Hive plans to use the proceeds to buy Nvidia GPUs and develop data centres. It has announced various other partnerships to grow revenue from its BUZZ Platform.

It aims to build AI giga factories for hyperscalers. So far, it has partnered with universities and technology companies. Even one deal with a hyperscaler like Amazon or Google can send Hive’s stock skyrocketing, despite the equity dilution from exchangeable senior notes.

Celestica

Celestica is also looking to raise US$3 billion through an equity offering to support working capital and capital investment in design and manufacturing capacity. The original design manufacturer (ODM) is seeing multi-year demand from its customer base, which comprises three hyperscalers, one being Google.

While the equity offering pulled Celestica stock down over equity dilution, the long-term growth prospects look bright. The company moved from third-party manufacturing to ODM for Ethernet switches and storage. It could use the proceeds to build more hardware content for AI data centres.

The 20% correction in Celestica’s share price is an opportunity to buy and book your spot in the future growth rally.

Bird Construction

Bird Construction is benefiting from Canada’s Nation Building initiatives, which have accelerated construction of infrastructure, buildings, and industrial projects. It has an order book of $11 billion, with a favourable mix of higher-margin products. Some of the large capital investment projects include Woodfibre LNG, a nuclear plant, and Bell’s AI fabric.

The BCE AI data centre is just the first project in the BCE-Bird partnership. More such projects could be announced and executed. Bird Construction stock has corrected 15% in July. Now is a good time to buy the stock as it has a strong balance sheet, order backlog, and recurring revenue projects that fund its monthly dividends.

Bird Construction is on track to achieve its targeted 8% adjusted EBITDA margin in 2027, from 6.5% in 2025. It sees growth spurts, with seasonal strength in winter due to the nature of its work program for mining clients and the start of new industrial projects.

The post Here’s Why These Canadian AI Infrastructure Builders Matter appeared first on The Motley Fool Canada.

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The Motley Fool recommends Alphabet, Amazon, Celestica, and Meta Platforms. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

When investors think about the data centre boom, artificial intelligence (AI) usually becomes the obvious investment angle. However, none of these facilities can run without the proper electrical infrastructure required to handle enormous power demands.

This rising demand is opening new opportunities for transformer and other electrical product makers like Hammond Power Solutions (TSX:HPS.A), or HPS. The company is already seeing the impact through higher sales and a growing order backlog, while rising U.S. data centre investment is becoming one of its key growth drivers.

In this article, I’ll explain why the ongoing data centre buildout could boost Hammond Power’s long-term growth outlook.

Hammond Power stock

Based in Guelph, Hammond manufactures dry-type transformers, power quality products, related magnetics, and power conversion systems. Its products are mainly used in electrical distribution networks serving data centres, mining, oil and gas, commercial construction, wind power, and several other industries.

After more than doubling in value over the last year, the stock now trades at $262.15 per share with a market cap of $2.4 billion. It also offers a small dividend yield of around 0.4% at its current market price.

The recent rally in Hammond stock becomes easier to understand when you look at what is driving the business. Data centre investment has become an important source of demand in the U.S., along with electrification and broader spending on power infrastructure.

Data centre demand is showing up in its numbers

Interestingly, the data centre boom is no longer just a long-term opportunity for Hammond Power Solutions. The company is already seeing the positive impact of this trend on its financial performance.

In the second quarter, HPS sales climbed nearly 45% year-over-year (YoY) to a record of $324.8 million. Its U.S. and Mexico sales jumped 73% YoY to roughly $273 million. Higher data centre shipments were a major driver of that growth, along with modest improvements in industrial markets and better price realization.

Although its home market sales fell 23.7% YoY due partly to the timing of large custom projects, its profitability moved in the right direction in several areas. The company’s gross margin in the latest quarter expanded to 31.5% from 30.7% a year ago with the help of higher pricing.

Hammond’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also improved 59.4% YoY to $53.2 million, driving its adjusted earnings to $2.76 per share from $1.72 a year ago.

Why Hammond’s growth runway still looks interesting

Even after record shipments, Hammond Power continues to have a large amount of work lined up. Its second-quarter backlog was close to 97% higher than a year earlier, driven mainly by large project orders tied to data centre activity. Although its backlog fell sequentially because shipments exceeded new order bookings, it remained at historically high levels.

HPS has also been expanding its manufacturing capacity to keep up with stronger demand. Its newer Mexican facility is already contributing to better operating leverage, while broader capacity investments should help it improve lead times and respond more quickly to customers.

Recently, on June 29, Hammond Power Solutions completed its acquisition of AEG Power Solutions, which should contribute positively to its financial growth in the years to come.

Overall, Hammond Power gives investors direct exposure to the electrical infrastructure needed to support data centre expansion. And its record sales, stronger adjusted earnings, added manufacturing capacity, and historically high backlog make it an attractive Canadian growth stock to buy as data centre investment continues.

The post Here’s How This Canadian Company Could Profit From the Data Centre Boom appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.

The artificial intelligence (AI) revolution isn’t just happening in Silicon Valley. It’s being built brick by brick, cable by cable, and megawatt by megawatt across several geographies, including on Canadian soil. The hyperscaler data centre capital expenditures’ explosive, AI-driven growth is reflected in record-breaking annual budgets and the single-project commitments that rival the annual spend of previous years. Some well-positioned TSX infrastructure stocks will see revenue, earnings, and cash flow grow as data centres flourish.

In 2026 alone, global AI hyperscalers may invest between US$700 billion and US$800 billion ($988 billion–$1.1 trillion) on data centre infrastructure projects, up from about US$400 billion in 2025. These data centres will require massive gigawatts of energy to power them up, daily.

Canadian investors looking to capitalize on this multi-billion-dollar data centre buildout don’t need to chase volatile tech megacaps anymore. High-quality TSX-listed infrastructure companies that supply critical power generation and electrical distribution hardware stand ready to ride this multi-year wave. Capital Power (TSX:CPX) stock and Hammond Power Solutions (TSX:HPS.A) are two standout Canadian infrastructure stocks that may continue to win big from the data centre boom.

Capital Power Corporation

AI data centres are notorious energy hogs, requiring colossal amounts of reliable power. Capital Power Corporation has stepped up as a primary energy partner for tech giants building next-generation digital infrastructure. On July 8, 2026, Capital Power officially secured a landmark long-term energy supply agreement (ESA) with Meta Platforms. Under the agreement, Capital Power will supply 250 megawatts of capacity to power Meta’s new $13 billion AI data centre development in Sturgeon County, Alberta.

This contract, which evolved directly from a preliminary framework signed in late 2025, secures predictable, high-margin cash flows for the TSX utility and power infrastructure stock over the next decade.

Capital Power is a formidable independent power producer boasting roughly 12 gigawatts of generation capacity across 35 facilities, including natural gas, renewables, and battery storage. Crucially, management reported having approximately two gigawatts (2GW) of underutilized infrastructure in May, giving the utility ample capacity to contract additional high-yield deals as new data centre builds come online.

Furthermore, CPX has teamed up with Apollo Global Management on a US$3 billion investment partnership targeting U.S. natural gas assets to support growing grid demands.

Management targets an 8% to 10% compound annual growth rate in adjusted funds from operations (AFFO) per share through 2030. This cash flow expansion supports a top-tier dividend profile. Capital Power’s current dividend yields 3.9% and management has raised the payout for 12 consecutive years. New data centre power supply deals may follow in the future after a recent Meta validation.

Although a forward P/E of 31 sits above CPX stock’s historical average following a 22% rally this year, the long-term revenue visibility from hyperscale contracts makes CPX a premium stock to buy and hold for dividend growth investors.

Hammond Power Solutions stock

Hammond Power Solutions provides the critical pick-and-shovel hardware required to manage the energy supplied to data centres. It manufactures custom dry-type and power transformers essential for power conditioning and distribution inside AI data centres. Regardless of which tech giant wins the AI revenue growth race, every single megawatt of server capacity requires custom transformers before connecting to the grid, and Hammond Power’s integrated power solutions business is competitive in this space.

Hammond’s operational strength recently propelled it to an official entry into the S&P/TSX Composite Index in June 2026. Financial momentum remains stellar. During the first quarter, revenue grew 31.5% year-over-year to $265 million. Custom data centre applications heavily drove revenue growth. Adjusted earnings per share rose nearly 30% and Hammond Power’s order backlog grew 94.6%.

To meet soaring demand, Hammond Power has expanded its footprint with a new manufacturing facility in Mexico. The plant began deliveries earlier this year. In June, the company completed a strategic $365 million acquisition of AEG Power Solutions. The deal establishes a new integrated electrical solutions (IES) business unit that should capture higher-margin, system-level demand. Bolstered offerings from Hammond Power should fortify its data centre power moat and accelerate revenue growth.

Hammond Power stock’s valuation multiples have reset following a 23% consolidation from its recent highs during the past two months. The stock’s forward P/E has reset to a much more attractive 30 times. New investors have a cheaper buying opportunity into this long-term growth stock.

The post 2 Canadian Infrastructure Stocks Poised to Win From Data Centres appeared first on The Motley Fool Canada.

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• Here’s How This Canadian Company Could Profit From the Data Centre Boom
• This Steal of a Utility Stock Can Bring in $1,283 a Year!

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool recommends Capital Power and Meta Platforms. The Motley Fool has a disclosure policy.

At the start of the year, there was an uproar when the Oracle of Omaha, Warren Buffett, announced his retirement. As he retired, all eyes were on his last investing strategies for the Berkshire Hathaway portfolio. As a renowned value investor, many people in the market follow his 48-stock portfolio. And one stock the value investor sold as he retired was Amazon (NASDAQ:AMZN).

Billionaires unload Amazon

There has been a lot of chatter around billionaires unloading Amazon stock for multiple reasons since Buffett’s exit. What interested me was the timing of two billionaire investors unloading Amazon stock.

First is the value investor Warren Buffett reducing his Amazon stock holdings by 77% in the fourth quarter of 2025 and exiting the stock altogether in the first quarter of 2026, according to its 13F Filings. While Buffett sold, active investor Stanley Druckenmiller’s Duquesne Family Office bought shares of Amazon in the fourth quarter of 2025 and then sold 94% of them in the first quarter of 2026.

If we go around digging into why they sold Amazon shares, you can come up with many reasons. For value investors, a price-to-earnings multiple of 31.6 times for 31% net income growth might have seemed expensive in December 2025. Moreover, 95% of free cash flow going towards capital spending on artificial intelligence (AI) data centres might have seemed risky.

For an active investor, the dip in Amazon’s share price because of Berkshire Hathaway’s sell-off presented a buying opportunity followed by a sale in the first quarter as AI stocks fell.

While the two billionaires have been selling Amazon, other wealth managers such as David Tepper at Appaloosa Management, Bill Ackman at Pershing Square Capital Management, and Larry Robbins at Glenview Capital Management have been buying Amazon shares. That explains the sharp dips and rallies in Amazon’s share price in the six months from October 2025 to March 2026.

What have billionaires been buying

Berkshire Hathaway has been buying shares of Alphabet (NASDAQ:GOOGL), and Duquesne Family Office has been buying several chip companies, with significant buying in STMicroelectronics. We get why Alphabet seemed like a better value stock than Amazon. Alphabet delivered similar 32% earnings growth at a P/E ratio of 21 times. It has market leadership in ad revenue, and search revenue continues to show strong double-digit growth. Even Google is investing a boatload of money in AI, but free cash flows are reasonably down 47%, unlike Amazon’s 95% dip.

Duquesne Family Office’s moves to chipmakers as chips enjoy short-term growth, as that is where all the AI capital spending is flowing.

Replicating billionaire buying on TSX stocks

If you were to replicate the investing logic of the two billionaires on the TSX, Celestica (TSX:CLS) presents a good opportunity. As an original design manufacturer having secured three hyperscaler clients, including Google, Celestica has a strong order book and significant potential for the next growth cycle. Now is a good time to buy the stock while it is still 27% below its June peak. It could surge another 50% or more in the third quarter as it executes its strong order book.

As for Alphabet (TSX:GOOG), you can buy this stock’s Canadian depository receipt in Canadian dollars. Fractional shares of Google can be bought at $55.30 per Canadian depository receipt.

The post Billionaires Are Unloading Amazon and Piling Into This TSX Stock appeared first on The Motley Fool Canada.

More reading

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• The TSX Is Charging: Here Are 2 Stocks I’m Watching
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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet, Amazon, Berkshire Hathaway, and Celestica. The Motley Fool has a disclosure policy.

BCE (TSX:BCE) has been in the news for its plan to build artificial intelligence (AI) for Canada. In the run-up to its rebranding from telco to techno, first announced in 2024, a lot of work has happened in this space. BCE lowered its capital spending on building Canadian fibre infrastructure and shifted its focus to building Bell AI fabric.

A little about Bell AI fabric

The work is ongoing on multiple fronts to bring Bell Canada’s vision for the AI fabric to reality. This fabric is a full-stack AI platform, and at its core is BCE’s nationwide fibre network. This network will be stacked up with data centre infrastructure, software, cloud capabilities, advanced professional integration services, and an ecosystem of Canadian technology partners.

Think of Bell’s fibre infrastructure getting a massive tech upgrade along the lines of Tony Stark preparing his Iron Man suit. This process is capital-intensive, needs a lot of collaboration, and pulls together multiple strings, from technology know-how to infrastructure building to capital.

The long-term growth opportunity for BCE

Bell has the advantage of a base fibre network and experience of building communications infrastructure on a large scale. It is partnering with universities and tech companies to collaborate on building the AI fabric. The government is also supporting AI infrastructure under the nation-building activity.

Bell has partnered with the Université de Sherbrooke on quantum technologies, post‑quantum cybersecurity, and sustainable data centre infrastructure. It has also ventured into direct-to-device satellite service by integrating AST SpaceMobile’s space-based cellular broadband network with its terrestrial network.

This journey of BCE from telco to techno looks promising and could generate higher returns in the long term. To give you a glimpse of the kind of returns BCE is expecting, its $1.3 billion investment in a Saskatchewan AI data centre is expected to generate $500 million in annual revenue and $400 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2027.

The risks that could slow BCE’s upside

Bell AI fabric opportunity looks promising, opening new revenue streams of cloud networking, high-performance computing, and satellite communications. But this comes at the cost of its already established fibre infrastructure in Canada, which is seeing a churn in subscriptions amidst aggressive price competition. The $500 million revenue from the AI data centre makes up for only 2% of BCE’s annual revenue of $24.5 billion. This conversion of revenue from traditional wireless and wireline services to AI and cloud services could see a pullback before a strong jump.  

Moreover, the Bell AI fabric infrastructure will increase capital expenditure needs, which means the first few years will see high depreciation costs. It means the earnings per share (EPS) growth might be negative, just as it is for most tech companies.

The biggest risk is the $42 billion debt on its balance sheet, which is 3.8 times its EBITDA. BCE has been disposing of its conventional, non-core businesses to repay debt and acquire new businesses with higher returns and faster growth. It has agreed to dispose of its land mobile radio network services business for $675 million and use the proceeds to reduce the leverage ratio to 3.5 times by the end of 2027.

The fine balance between risk and growth

BCE is currently walking on a thin rope. On one side, there is AI and cloud computing growth, and on the other side, the risk of high leverage and revenue shift from telco to techno. At this point, valuation is a challenge as the company undergoes a turnaround.

If you are looking to invest in BCE, be prepared for three to five years of stagnant growth or decline, as EPS could take a hit amidst the transition. If your motivation to hold the stock is the 5.6% dividend yield, you could consider buying, but do not rely on this dividend for your retirement. Remember, tech companies are not good dividend payers due to their need for constant infrastructure upgrades and investment in research and development.

However, you could hold off buying BCE until its AI fabric starts contributing meaningfully to the revenue. At least then you would see the telco-to-techno conversion altering the fundamentals and the stock valuation.

The post Don’t Buy BCE Stock Until This Happens appeared first on The Motley Fool Canada.

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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends AST SpaceMobile. The Motley Fool has a disclosure policy.

If you think the rapidly growing artificial intelligence (AI) is a software story, you might be overlooking a much bigger investment opportunity. Every AI model, cloud platform, and data centre relies on a massive network of physical infrastructure, from transformers and electrical equipment to engineering services and power systems.

That creates an opportunity for many companies working behind the scenes of the AI boom. And the great news is that Canadian investors have several interesting ways to gain exposure to this long-term trend without buying the world’s largest technology companies.

In this article, I’ll highlight two top Canadian stocks that are helping build the infrastructure behind AI and explain why their products and services are becoming increasingly important.

Keel Infrastructure stock

The first Canadian-listed company building the physical base for AI computing is Keel Infrastructure (TSX:KEEL). It mainly develops data centres and energy infrastructure for high-performance computing workloads, including AI. The company’s portfolio includes power generation, established grid connections, and renewable hydroelectric capacity across Pennsylvania, Washington, and Quebec.

Currently, KEEL stock trades at $5.50 per share with a market cap of $3.4 billion. Interestingly, the stock has surged 287% over the last year and 70% in 2026.

That strong stock performance has been driven largely by a major business transformation. Keel shifted away from Bitcoin mining, exited its Latin American megawatt operations, redomiciled to the United States, and refocused its development pipeline on North American high-performance computing and AI markets.

Its first-quarter results still showed the cost of that transition as Keel’s revenue fell 23% year-over-year (YoY) to US$37 million. General and administrative expenses rose to US$27 million due largely to professional services related to its U.S. redomiciliation, accounting conversion, and Paso Pe sale. As a result, the company posted an operating loss of US$98 million.

However, Keel’s long-term growth potential rests more on development than current earnings. The firm has a 2.2-gigawatt pipeline, including 648 megawatts of secured capacity.

As of May 8, Keel had about US$533 million of liquidity, which is expected to support Panther Creek, Sharon, and Moses Lake AI infrastructure projects through lease execution while supporting the start of construction at Moses Lake. These projects make Keel a direct way to follow the AI infrastructure buildout.

5N Plus stock

The next stock fits into the AI buildout through specialized components rather than physical sites, and that’s 5N Plus (TSX:VNP).

This Montreal-based firm produces specialty semiconductors and performance materials used in renewable energy, space satellites, imaging, optoelectronics, and advanced electronics.

At the time of writing, VNP stock traded at $33.40 per share with a market cap of roughly $3 billion. Its shares have climbed 226% over the last 12 months and 88% in 2026.

Unlike Keel, 5N Plus entered 2026 with strong earnings momentum. Its first-quarter revenue rose 33% YoY to US$117.9 million, mainly because of higher specialty semiconductors volumes and stronger pricing for bismuth-based products.

The company’s adjusted EBITDA jumped 41% from a year ago to US$29.2 million with the help of higher semiconductor volumes and prices that exceeded inflation for space solar power and bismuth products. With this, its net earnings nearly doubled to US$17.8 million from US$9.6 million. 5N Plus is now expanding capacity and improving productivity to support long-term demand.

Overall, its strong earnings growth, specialized semiconductor materials, and expanding production capacity position 5N Plus as an attractive stock to benefit from the long-term expansion of AI infrastructure.

The post The Canadian Companies Building AI Infrastructure and Why They Matter appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The rush to build artificial intelligence (AI) infrastructure is creating opportunities far beyond the tech sector in 2026. Data centres consume enormous amounts of power, and that electricity must be distributed through reliable equipment that can handle demanding workloads. Industry forecasts estimate the global data centre buildout could reach $650 billion, while research and advisory firm Gartner expects worldwide information technology (IT) spending to climb to $6.2 trillion in 2026.

A Canadian company that could emerge as a key winner from this data centre buildout is Hammond Power Solutions (TSX:HPS.A). Its surging sales, solid backlog, and strong growth in custom products tied to data centre projects suggest demand remains robust.

In this article, I’ll discuss why Hammond stock could become a Canadian winner from this massive infrastructure investment.

A top Canadian stock to benefit from the AI data centre buildout

In short, Hammond manufactures dry-type transformers, power quality products, and related magnetics used across data centres, commercial construction, mining, oil and gas, water treatment, and renewable energy projects. The company also has manufacturing facilities in Canada, the United States, Mexico, and India.

Hammond stock currently trades at $312.93 per share, giving it a market capitalization of about $2.9 billion. While its annualized dividend yield is modest at around 0.4%, the stock has rewarded shareholders with exceptional capital gains lately. It has surged 146% over the last year and is up 93% year to date.

Record demand is driving growth

The company’s latest results help explain why investors have become increasingly optimistic about its growth prospects. In the first quarter, Hammond posted record revenue of $264.8 million, up 31.5% year-over-year (YoY). Its strongest growth came from the United States and Mexico, where sales jumped 41.8% as custom transformer shipments rose, driven largely by data centre-related demand. India also delivered a solid 33.5% YoY sales growth, while Canadian sales rose 3.2%.

Even more encouraging, Hammond’s backlog in the latest quarter was 94.6% higher than a year ago and rose 4.1% from the end of 2025 despite record shipments. That clearly reflects that demand continues to outpace deliveries, giving the company good revenue visibility for the rest of the year.

On the profitability side, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 32.8% YoY last quarter to $41 million, while its adjusted earnings rose 29.7% to $2.08 per share. Better pricing and improved factory overhead absorption also helped its gross margin recover to 30.1% in the first quarter from 29.2% in the previous quarter.

However, tariff-related input costs continued to pressure Hammond’s profitability, contributing to a decline in reported net earnings.

Expanding for the next phase

Clearly, the data centre opportunity could become even larger as Hammond continues expanding its capabilities. Its newest manufacturing facility in Mexico began shipping products during the first quarter, increasing production capacity and improving lead times for customers.

Last month, the company also completed its $365 million acquisition of AEG Power Solutions, adding power conversion, critical power, controls, and service capabilities to its portfolio.

Overall, Hammond stock has already delivered outstanding returns, and factors such as tariff-related costs remain worth monitoring. Nevertheless, record sales, a rapidly growing backlog, and expanded manufacturing capacity suggest the company is well positioned to benefit as investment in AI infrastructure and data centres continues to accelerate, which could help its share price keep soaring in the years to come.

The post 1 Canadian Company Set to Make a Fortune From the $650 Billion Data Centre Buildout appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.