The Canadian Investor - Apple’s New CEO + The Company Challenging Home Depot

Episode Date: April 23, 2026

In this news and earnings episode of The Canadian Investor Podcast, we break down Canada’s latest CPI report as inflation reaccelerates, with rising gasoline, food, rent, and insurance costs putting pressure on households. We also discuss what higher energy prices could mean for businesses and the broader economy. We then cover Apple’s major leadership transition as Tim Cook steps down as CEO after delivering massive shareholder returns, and discuss what’s next for Apple’s product pipeline and AI strategy under new leadership. Next, we analyze Adobe’s massive $25 billion buyback announcement. Is management signaling the stock is deeply undervalued, or trying to put a floor under shares as AI disruption fears intensify? Finally, we discuss QXO’s $17 billion acquisition of TopBuild and why traditional industrial businesses may be attractive in the AI era, plus TSMC’s incredible growth as demand for chips and AI infrastructure keeps surging. Tickers of stocks discussed: AAPL, ADBE, QXO, TSM, UNH, HD Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own cyclicals. Don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time.

Welcome back to the Canadian investor podcast. I'm Simon Berange. I'm back with Dan Kent. We're back for a news and earnings episode. Our earnings are starting to pick up, but quite a bit on the news front, some big departures, CPI data for March as well. That will be touching on Adobe doing some massive buybacks and then QXO, the company that Braden had brought to the podcast.

when he came on a few weeks ago, one of his or his most recent acquisition, or not acquisition, but buys. And so it's big news regarding that. And then we'll finish up with TSM and if we have time, United Health. So aside from that, Dan, anything I'm missing before we get started?

No, it should be pretty good. More, there's still not a lot of Canadian companies reporting, but lots of US news to talk about for sure. Yeah, exactly. So let's start with CPI, I think. Not to obviously go into too much detail, but I think it's something we need to talk about because of the warrant in Iran and how much energy prices have risen. So Headline CPI increased 2.4% over a year. And that was compared to 1.8% for February.

And when you're looking on a month-over-month basis, so the changes from February to March, it was up 0.9%. So that's large. If you annualize that, that's 8.4%. So pretty massive. And it really came as no surprise that higher energy prices played a big role in the jump in inflation in March. However, gas prices only jump 5.9% on a year-over-year basis. So some of you may be listening to this and say, what? What are you talking about?

Like, I'm paying way more than 5.9% extra, even if I'm thinking about last year. well, that's because last year the carbon tax was actually still in effect in March and got removed in April of last year. So April 1st, 2025 was the effective date for the removal of the carbon tax. So really some base effects changes here. So it'll be interesting to see in April because using that logic, it should be a much larger jump on a year-over-year basis because it will be the first month where the data will not be impacted by, the carbon tax, which will have been fully removed now for a full year. But gasoline was still up was up pretty big when you're looking on a month over month basis. It was up 20% compared to

February because of course a caravan tax had no impacts there. So before I continue, Dan, anything of note here for you from your perspective? No, I mean, the headline number seems quite small, but again, it's like been the situation for a while now where the elements that are that hit literally everybody, like food, gas, shelter, I guess not to a huge degree now, but people are still feeling it despite CPI being, you know, in range, I guess you could call it. This is kind of in their target, but yeah, I've definitely felt it at the grocery store and especially at the gas pump. It's, it's been wild over the last while. Yeah, exactly. And Definitely energy prices as a whole.

They were up 3.9% year again for the same reasons that I mentioned when you're talking about the carbon tax. But it were also muted by natural gas actually declining to the tune of 18%. Food prices, like you said, they continue to rise pretty quickly. Food purchase from store was up 4.4% you over here following a 4.1 increase in February. some of the good news here for those who are updating their wardrobe. So you're looking at a decline of 0.4% year over year. I'm in that situation where I was still wearing some of my pandemic era clothes. So definitely got some pretty good deals.

I have to attest that I got some pretty good deals as I've been revamping my wardrobe over the last month or so. And then if you're looking at that year, just a small increase of 0.3%. Core CPI was around target, well, sorry, yeah, it's around the target of, you know, that 2% or range of 1 to 3%, but the midpoint being 2%. So core CPI was 2.3% when you're looking at CPI median. CPI trim 2.2% and medium is just taking the middle price increase of the whole basket, and trim is just removing the extremities. So it does look better on that part, but something to keep an eye on because, Mostly when you're thinking about these, it removes the prices of food and energy. So clearly you're going to have some changes, especially when you have some massive increase in prices due to higher energy and gas prices.

And in terms of the main contributors, in terms of upwards contributors, some pretty important things. So you're looking at rent, gasoline, food purchase from restaurants, vehicles, even insurance premium. So those were all pretty big contributor if you're looking on a year-over-year basis. And then the main downward contributors is just natural gas, like I mentioned, homeowners replacement costs. And essentially those are the big things. Obviously, there's some other things in place, but not super important in terms of probably day-to-day stuff.

So some important categories that are going up. So something to keep an eye on probably in the next few months to see how it's jumping, especially in the face of that. the, I guess energy crisis that we're seeing with the street of hormones. Yeah, and you can, I think we went over this a few weeks ago when we talked about Boyd, like the auto body company. Yeah, I had mentioned that a lot of people are jacking up their deductibles to try to get insurance premiums lower because insurance is getting so expensive over the last while.

I mean, you can see, yeah, it's a 7% increase. I imagine that would be year over year. Yeah, year over year increase. Yeah, year over year. insurance has gone up an insane amount. Like I've, I've never had an insurance claim over the entirety of me driving and even my premiums have gone up like three straight years.

So yeah, it's, it's getting expensive. You can tell I upgraded my wardrobe too. I got the, they brought the Kirkland hoodies back. Oh, the Kirkland goodies, of course. 20 bucks.

No, it's, yeah, just updating a few different things. Definitely spring, summer for me. But overall, I mean, I think the headline number was. kind of what economists were predicting there. Again, it's going to be interesting to see what we're seeing in April, whether we're still getting some cost pressure from high gasoline and energy

prices really remains to be seen, but something to keep in mind because it's also an input for a lot of businesses in the economy. So it will have an impact on the economy and possibly an impact on the businesses you own. Something will be able to tell as we listen to more and more conference calls now that will be coming up. I'm sure CEOs, especially of companies that more traditional companies in terms of producing actual goods, I'm sure we'll be hearing from CEOs and what kind of impact it's having on their bottom line, those higher energy prices and what kind of impact they foresee depending on how long they will have to deal with elevated prices.

Yeah, it's pretty much they kind of call it the master input. but it impacts almost every single company you can think of. So the sooner they can kind of stabilize that, the better ultimately. But yeah, that's all I got on CPI. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too,

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There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing, With no commissions, on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market.

And they keep making it easier to build a well-rounded portfolio. Soon you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to first free. focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest, head over to questray.com, open and fund your account with code TCI and receive $50. Conditions apply. Starting something new is uncomfortable. I remember launching the podcast and thinking, what if no one listens? What if it just doesn't work? That doubt is part of it.

And honestly, starting a business isn't easy. figuring out things on the fly, wearing a bunch of hats, and hoping it all comes together. If you're in that phase right now, trying to build something and actually sell products, having the right tools makes a huge difference. That's where Shopify comes in. Shopify gives you everything you need in one place. You can build a clean online store with ready-to-use templates, manage inventory, payments with shop pay, analytics, and even use built-in AI tools to create product descriptions and improve your listings. It's built to help you go from idea to first sell. It's time to turn those what-ifs into chaching. Sign up for your $1 per month

trial today at Shopify.ca. Go to shopify.ca. That's shopify.ca.cha. Cha-ching. Yeah, so we'll move on here. Big news this week. Apple CEO transition. So Apple and that Tim Cook would be leaving as CEO effective September 1st of this year. You will move to the role of executive chairman of the board. Cook has been CEO of Apple since 2011 and joined Apple back in 1998. During his tenure, Apple went from a 350 billion market cap company to being over $4 trillion in market cap. Not too shabby here. Services and wearables were also became massive parts of the business under his leadership.

And these were things that were launched also under his leadership. And services now bring in over $109 billion in revenues while wearable clock in around $36 billion, which combined represents about one third of Apple's revenue. So it's definitely not the iPhone-only company that a lot of people got used to. It is starting to diversify, even though iPhone is still the bulk of their revenue. you oversaw the launch of a bunch of different products, including Apple Watch, AirPods, HomePod, AirTag, Apple Vision Pro, Apple Silicon in Macs, and Apple Pay.

HomePod, definitely not a big success because I kind of forgot about. It's like an Alexa or like those things. Yeah, so I think I was wondering whether it was even still being produced. Apparently it is, but it's not a big seller when it comes to Apple. and it's really people want to stay within the Apple ecosystem. Overall, he didn't oversee the launch of any revolutionary products like the iPod, the iPhone, and iPad. I think he mostly was there and made those products better. But he did make a lot of money for shareholders.

So during his tenure, the total, the stock stock totaled returns of over 2,300% while the S&P 500 sits at around 6,000. 180% during that period of time. So you could have done a lot worse than owning Apple stock. He'll be replaced by John Turnus, who is currently the head of hardware engineering at Apple, senior vice president. Turnus joined Apple's product design team in 2001 and became VP of hardware engineering in 2013 and then became part of the executive team in 2021 as senior vice president of like I just mentioned. And he was instrumental in the introduction of the iPad.

AirPods, and multiple generations of iPhones, Mac, and Apple Watch. So for me, in terms of this news, not overly surprising, I had seen some rumors that this could be coming. And John Turnus, it is, sorry, I kind of forgot, John Turner's, there you go. I was like, what's his first name again? But I had seen his name being floated around as a possible replacement. And there's really two big questions. And I'd like to hear what you have to say about that.

First, first of all, will Apple launch any new category changing product or will it just continue to come out with new versions of existing products or maybe take ideas from competitors and just make their own thing? And what's Apple's AI strategy going to be forward? Yeah, I mean, in terms of new products, I guess they've tried over the last while. I mean, they had the, what was that, the Vision Pro or whatever it was like that. Yeah, the Apple Vision Pro. Yeah. which was, I mean, a disaster, I think. I mean, probably launched.

I think it's been a bit of flob. Yeah. Yeah. I mean, launched at the wrong time, I guess, like, you know, right when inflation was sky high and, you know, nobody was paying, what was it, $3,500 or something for a, I think that would be US dollars for like a VR headset or whatever it may be. In terms of AI, I haven't really looked into what Apple is even doing in regards to AI because there's so much other.

Like you look to the alphabets, the Amazon's, whatever it may be. And I mean, they're doing so much. I mean, I think Apple kind of falls to the, you know, it goes on the backburner. Nobody really pays attention to it a lot. The one thing I will say is I ended up first buying Apple when Cook took over. And I guess his spoiler alert for Monday's episode, we're kind of going over some inopportune sales, I guess, over the, over the course of our, you know, investing career. but when he took over, there was a lot of, I remember back then, there was a lot of idea that he would not be able to replicate kind of the vision moving forward. And I mean, look at the results. He definitely did. I know the stock. I mean, I would argue he did not from a product perspective. Maybe not for a product. Yeah. From a shareholder return perspective, clearly he's done amazing for shareholders. I think it would be, you'd, you'd,

You can't argue against that. I mean, the returns 2300% versus 680 for the SMP 500. And they're probably a big reason why the S&P 500 is up 680% because they've been a larger and larger constituent of it. But, I mean, I would argue that, yeah, they just perfected products or created new products that were already out there with competitors and came out with their own versions, like the Apple Watch, for example. Yeah. And he, back when he took over, like Apple was, I don't want to say dead money, but it did not perform very well from, you know, 2012 to probably maybe late 2016. It was pretty much flat, maybe increased a little bit. But yeah, I don't know. He's, he's probably not at the front of all the product innovation, but I mean, you can't argue with the returns. He did a, he did a heck of a job for many years. I don't really know. Like the guy taking over. I don't pay attention to Apple a lot.

It's always been really expensive to me. So it's not a company that I pay a lot of attention to. So I don't really know what it's going to do in regards to AI. I mean, I think they're partnering with Alphabet a lot on the mobile devices, aren't they? I'm pretty sure they have a partnership with Alphabet. That was it. But again, we could see a different direction here. I do get the sense that they're trying to embed it a bit more kind of privacy focus.

embedding AI into their devices, but not making them making a better experience without, I guess, some of the risk associated with it. That's a general sense that I have. So far, what I've seen in terms of use, like Siri is still terrible. And some of them, it just seems like hasn't improved all that much. I have it on my laptop. And when I get a text and it summarizes still, I don't know, half the time, it has, it's hallucinating in terms of the summary.

It is. It's doing. So we'll have to see. But enough about Apple. Let's move on here. We have a couple more things we want to go over. So Adobe announcing $25 billion in buybacks. So interested in what you have to say about this one. Yeah. So huge buyback. They're looking to buy back around $25 billion in shares, which would be 25% of their market cap. I think they're like $105 billion company right now. Obviously, this is just the amount they're authorized to buyback. They don't necessarily need. to actually buy back all these shares, but they did so through a four-year window. So I think to the end of 2030, just to put it into context, Apple has, I think it's like a $110 billion market buyback, and that's only around two and a half percent of their market cap. So I would obviously, if you look to previous highs, this would have been a much smaller portion of the company, but when you're down 65 to 70 percent, it's going to take up a pretty big chunk. And I do find this

entire situation very interesting because I think a lot of people are kind of shouting from the rooftops about how cheap software is right now. And the reality is, I think previously, as these companies traded at insanely high valuations for a very long time, because the moat was firmly in place. So you introduce a ton of AI tools. The moat starts to be put into question. And ultimately, you have the market wiping out any of the premium valuation multiple it once had. It doesn't really matter if the pace of growth is continuing now. There was a lot more certainty on growth in the future pre all these tools. I mean, you can look at another company like Constellation Software, which is not really

reporting any impact to its results, but its valuation multiple has just been wiped out. And I just think, you know, a company growing at a 10% clip with, you know, a large mode is, is going to trade for a higher multiple than one growing at 10%, but no moat. So I do see a lot of people who've kind of mentioned that Adobe's results aren't suffering. And I think like around a lot of software companies, that's similar. Like not a lot of companies reporting all that bad at results, but I don't really think the market cares all that much. They just don't want to pay a 40x multiple for these companies anymore.

And if I were to bet, I don't see that ever returning unless, you know, you see these companies adapt and kind of develop their own systems tools, whatever it may be. And for context, Adobe, as recently as I guess mid-2024, roughly it was trading around like mid-to-high 30s in terms of price to earnings and price to free cash flow. Price-to-free cash flow was a bit higher than price to earnings and now both are trading on a Ford basis and now both are trading around. content. 10x, yeah. Listeners, yeah, an idea of how much it's decline. And looking at Adobe's past, I mean, it would ever rarely get under 20. Extremely rare. Typically, it would be, yeah, like in that, I would say mid to high 20s, that would be a more typical range for, for Adobe. And then peaking, especially in 21, in the high 40s to even close to 50 here. Yeah, it's like they were

always very expensive relative to to how much they're growing. And now you look at, they're kind of treating, like to me, they're, they're valuing Adobe as kind of a slower, mature company that's not really going to grow all that much in the future, which, again, you look to the current results. They're still growing at a pretty reasonable pace, you know, all but not as much as they were, you know, five years ago. But the stock seems cheap, but this is kind of where it gets really interesting. And if Adobe is so bullish on AI for the future, like, why is this $25 billion not being deployed into developing further AI infrastructure? Like, I think their Firefly, you know, kind of model is only generating like $400 million, I think,

in ARR. So it's kind of, it's not even close to any of the other elements there. And I mean, effectively, they're telling you they feel the returns from buying a. Adobe shares right now will yield higher returns than investing in AI tech. And I just think, you know, if the bear case does come true and these generative tools are commoditized, like buying back your stock at this level is just kind of rearranging, deck shares, really. Like, it just seems like. Yeah, I mean, the bullish case is that.

So Bulls will say, look, even the company, the company seeing how cheap the stock is. So that's why they authorize a 25 billion buybacks for the next four. years, the bears will say, well, the company is getting desperate and they need to buy back this amount of stock to basically put a floor because if they buy back that much stock or let's say 10, 15 billion worth of the 25 billion, then they're putting a little bit of a bid, a guaranteed bid for their shares, right? So that's probably the two sides that you can see where sure it could be bullish, but on the other hand, it could be bearish and just a bit of a desperate attempt from the company to

try and put a floor under the stock price by doing that. Yeah, it's a, it's a huge buyback headline, which, you know, you pretty much have the company coming out and saying our shares are, they're cheap. But, like, even if we assume that, like, say Adobe is cheap here, and it is cheap, like, there's no question, you know, 9x or 10x, whatever, free cash flow for a company grow growing at a 12 to 14% pace, like even slower, mature companies trade at higher multiples than this. But if you are, I completely lost my train of thought. That's all right. That's okay. I mean, at the end of the day, for me, it's just for those interest in buying a

company like Adobe, you just have to look further out than just the next year. The next year, the revenue increase, their earnings will probably look pretty solid, probably in line with the last few years. But where you really need to start to focus. is what happens like three, four, five years down the line. And I think that's where there's a lot of disagreement between the Bulls and the Bears is the Bears say, okay, it's still looking okay right now, but it's really that long term where the company could be in real trouble. And the Bulls say, look, the more recent results or guidance for this year, everything's looking really good. From a company's perspective, this is getting undervalued. So I find the Bulls are looking a bit more

short term where the bears are looking a bit more long term. And I guess the market will determine which one is right. And obviously the results to over the next four or five years. Yeah. And they're not very bullish on the future. I mean, I got my train of thought back. I'm sorry. Sorry, it's, no problem I have to jump in, right? It's been a heck of a week for me over the last while, very sick with six-month-old twins. So yeah. But I was going to say, like, if you think, like let's just say Adobe at these levels provides, you know, a market beating return of, let's just say, I mean, obviously the markets are pretty expensive now. So maybe 12 or 14 percent, you know, annual returns kind of outperforms the market.

You know, if you're that bullish on AI, wouldn't you believe investing that money internally might end up yielding a higher return than that, which is kind of where the issue comes from me. and, you know, huge buyback moves like this are, I'm not saying it's a case here, but it is often an attempt by management, as you mentioned, to kind of put a floor on the stock and kind of shift the narrative. So, you know, the stock just keeps consistently sinking. So what's a good way to shift that? Well, you announced, you know, to the world that you believe your stock is cheap because you're going to buy back a quarter of the company. But buying back shares really only works if the stock price goes up. So PayPal, PayPal, is a prime example of this. So they bought back nearly 20% of shares outstanding from 2021 up until now, and the stock is down 80%. Yeah. They basically threw money out of the window.

Yeah, burned it. And you have to think how much more down the stock would be if they had none of that. And then the other way is you have that extra capital. Could it not be invested in better ways? Or why not a dividend? It's so funny how these companies always go for the buyback. And to me as a shareholder, buyback is definitely dependent on the shares actually being cheap, but the market agreeing with you. Because if the shares look cheap, you buy them back, but the market things, they're still overvalued.

They're not quite cheap. Then you're just throwing money, like you're lighting money on fire where at least when you pay a dividend, just do it as a special dividend if you want to do it that way. Then you're really returning money to shareholder directly. Yeah. That's it. So it just seems like companies always default to buybacks, I think over the last decade or so, but something I'd like to see with these more kind of legacy companies. Yeah, I mean, in the end, if they buy back all these shares and, you know, it ends up being

that the company was significantly undervalued, like it looks absolutely genius. Like, Loblaw is a company I can think that did this for a long time in Canada. And the amount of money they spent on buybacks and where their share prices right now, they were absolutely genius. But what makes this so hard to navigate is, you know, Lobla didn't have this disruptive technology coming to the market and like adapting. I mean, new stuff is coming out like every couple of weeks. And I haven't played around with Claude's new design platform that they came out with. Like the general consensus is that it's terrible. But I'm also getting that consensus a lot on the X algorithm from people who are also variable bullish Adobe.

So it's kind of hard to to gauge how bad it is. I am going to end up using it over the next while here. But I think we have to remember how terrible AI was when it first came out and to look where it is now. Like the tech has evolved so much in three years. Like you could argue it's probably one of the fastest evolving pieces of technology we've ever had. So in five years from now, who knows what you're going to be able to do with it? No, no, I think that's a good point. Having cash on hand is essential for any business.

Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too, until we switch to the new EQBank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFT, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up quick and fully online, no branch visits because, let's be honest,

no business owner has time for that. We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at eCubank.ca slash business. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market.

I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to me. make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to focus on what

really matters your investment strategy, not trying to avoid fees. Ready to invest, head over to questray.com, open and fund your account with code TCI and receive $50. Conditions apply. Starting something new is uncomfortable. I remember launching the podcast and thinking, what if no one listens? What if it just doesn't work? That doubt is part of it. And honestly, starting a business isn't easy.

You're figuring out things on the fly, wearing a bunch of hats, and hoping it all comes together. If you're in that phase right now, trying to build something and actually sell products, having the right tools makes a huge difference. That's where Shopify comes in. Shopify gives you everything you need in one place. You can build a clean online store with ready-to-use templates, manage inventory, payments with shop pay, analytics, and even use built-in AI tools to create product descriptions and improve your listings.

It's built to help you go from Idea, To first sell. It's time to turn those what-ifs into Cheching. Sign up for your $1 per month trial today at Shopify.ca. Go to shopify.com. That's Shopify.ca. Cheching. Let's move on here. Let's go to the big acquisition from QXO to acquire top build for $17 billion. dollars. So this is, it's pretty massive. I don't know if I would have really picked up on it, unless Braden brought it to, uh, to the forefront and started a position a few weeks ago and talked about it on the podcast, but definitely if you go back to that episode, I believe there are three stocks with big opportunities ahead, something like that, the title. So just maybe like five, six episode down the line, not too far if you haven't listened to it. This was definitely

an interesting one when I saw the news. So on Sunday QXO announced it was buying TopBillD for $17 billion. TopBilt is the largest contributor and installer of insulation building products in North America. And although it's being sold as a acquisition, this is essentially a merger with QXO being $15 billion in market cap as I'm looking at it right now. So even the Brad Jacob actually went on odd lots for a podcast that was released. This. week so following the the announcement and they're like isn't this more of a merger he's like yeah yeah that's a fair way to put it he like he admitted it he's like yeah it's just the companies are just so large it's still an acquisition but you can view it from a merger lens q xo is paying a 20 percent premium on the price and 14 times adjusted ebita multiple they believe they can achieve about 300 million in synergies over the next few years factoring that in then they would be paying a price closer to 11 time EBITU. Once the transaction is completed, there'll be a leader in several key categories of building material distribution, number one in insulation and waterproofing, number

two in roofing, number one or number two, depending on the geography for lumber and building materials. The interview that he did on Odd Lots, so from Bloomberg, was really interesting. I encourage anyone who wants to start a position or is considering starting a position in QXO to listen to that, really interesting, fascinating. I'm definitely more intrigued about the business after listening to that Oddlots interview as well. So 11 months ago, he said on that podcast, they had no building products revenue whatsoever, and now with this acquisition, it will make them the second largest building product distributor in North America.

They expect the transaction to be accretive to earnings, which means it should increase their earnings per share. He said that they believe they'll get tailwinds with AI because those data center, they need insulation, they need roofing, they need waterproofing. Those are all areas that QXOs. QXO's are leaders in and of course will be leaders for the insulation part with the new acquisition that they're doing. and top build apparently gets about single digit revenue from data centers currently,

but it is growing fast. He did not specify how quickly it's growing. And the way they make acquisition is pretty interesting. So they cast a really wide net. They don't zero in on one particular company. They cast a wide net of interested companies and then end up acquiring the ones that they believe provides the best value for the business going forward in terms of cost, growth prospect, and management and company culture.

So they really want to have kind of all those attributes. So that way they don't end up just overpaying for a company that just because they did a whole lot of work on this one company and really zoned in and then have to overpay. They retain a lot of flexibility when it comes to acquisition. They really think on a long-term basis five to 10 years and they haven't been affected directly by tariff. So that was one of the questions.

since their products are produced in North America and he said no direct they haven't been directly affected by it but he said that I could have had an impact and could still have an impact in terms of potential demand destruction especially in North America because they do have business in Canada as well so really interesting interview from Brad Jacobs really encourage people to listen to it if they're looking to start a position in QXO or intrigued by the company. But yeah, massive acquisition and looks like Home Depot has some competition here. Yeah. This is kind of like it was interesting when he brought this up. I had no idea what this company did. Like if I were to guess before we started, I would imagine it would have been some

tech company. And then he started talking about how they build, they're buying like, you know, construction distribution type companies, which is pretty much the exact reason why I own Home Depot. Like they're doing the exact same thing just at a larger scale. Like they bought. S.R. distribution a few years ago for around the exact same price, like exact same acquisition multiple as well. So Home Depot is getting into this space hard. I would imagine like eventually, you know, if QXO gets big enough, like whether or not, you know, if this becomes the bulk of their company, whether or not Home Depot would be, would kind of be eyeing them because they're, they're getting into that space because they have been much, you know, way too reliant on,

I guess you could say, like retail, rent. innovations, things like that. So this is more the distribution side. But if I didn't own Home Depot, I would be very interested in this company because I think, you know, there's a lot of, you know, especially in the age of AI, there's a lot of tailwinds for this type of industry. Yeah. And it's kind of nice to have a company that's unlikely to get disrupted by AI that will probably just see improvements in terms of efficiency with the help of AI, but these kind of traditional type of companies or the old economy, whatever you want to call them, to me, they're pretty, they're pretty attractive, especially when you have so much uncertainty about who will be the beneficiaries of AI in tech,

all the spending that's being done there. Will they see proper return on investment when you're thinking about the hyper-scalers? or will these SaaS companies like an Adobe just be completely disrupted by AI or will they see some tailwinds? To have these traditional companies, it's something really interesting. And something else he actually mentioned on that interview was that, yeah, it's been a slower business cycle for the building industry for obvious reasons. But I still very bullish longer term.

So really interesting. For those interested, as we're recording this. on Wednesday, April 22nd, the stock is in a 16% drawdown over the last few days following the acquisition. So I get not surprising, markets tend to treat acquirers a bit harshly, especially a large acquisition like that. So for those interested, stock is down quite a bit. I'm not saying it's cheap or not.

Their valuation, I think, is a bit all out of whack because of all the acquisitions that they've done and considering it's only been 11 months now. But yeah, when I'll keep an eye on, definitely on my radar. Yeah, and I guess the final point, like if you go to look at the like a stock chart, this company did like a reverse merger. So you're going to see like the stock price all over the map. It's different company. Like you pretty much just buy, you know, a shell company.

So you kind of save on, you know, the costs of actually listing on the exchange. So you kind of buy this company and just rebrand the ticker effectively. So if you see this company jumping all over the place, it's not really accurate as to what QXO was done. Yeah, I think it became QXO in June of 2024. Yeah, it was Silver Sun Technologies, I believe, before then. So, yeah, no, that's a good point. Now, let's move on to, yeah, some tech plays here.

So, TSMC, so Taiwan Simei Conductor, ticker TSM reported, I think a pretty nice quarter. It's a company you own, if I remember correctly, right? Yep, I didn't buy it too long ago. I kind of took a lot of flack on it for buying it. at all-time highs and it was up quite a bit, but I just, I don't see this space slowing down at, you know, anytime soon. It was a quarter that was probably largely priced in, but it was great nonetheless. It's kind of mind-boggling to see a company of this size. Like, I don't know what TSM's market cap is now probably close to two trillion, but they're growing at like a 40%

clip. Yeah, 1.9. Fine. Yeah. So revenue came in above the company's high end of guidance, grew 40.6% gross margins, 66.2% again came in above the high end of guidance. And operating margins came in at 58%, which like for a fab company, it's pretty unreal to have that margin profile like operating in Taiwan, no doubt helps. I mean, I know they're trying to build more fabs here, which will probably hit margins. But yeah, just. Yeah. And for those not familiar, fab is just basically where they actually physically produce the semiconductor chip. So the, whether GPUs, I just wanted to clarify that term. Yeah, so high performance computing continues to accelerate.

It now makes up over 60% of total revenue. And if you go back to pre-AI levels, this typically hovered around 40%. So smartphones have declined to 26% of revenue. And this is partly because the segment is, you know, it's relatively cyclical, but it's also because high performance computing is just taking up so much more of the revenue base. So if you look to a chart of like their HPC, revenue, you know, in terms of percentage of total revenue versus smartphones, like HPC is up and to the right and smartphones is kind of down into the right. This isn't really, this is a good thing in my opinion, like that they're accelerating, you know, the area that has that much demand. And typically TSMC is a company that kind of sets out to establish a capacity target for, you know, production. And once that target is hit, they don't add additional capacity, but apparently demand is so high they're having to break this practice. And, and ramp up additional capacity,

which is why you see, you know, the AI, or sorry, the capital expenditure spending they're going through. They kind of mention, and this is, this is pretty interesting. They mentioned that the use cases of AI is shifting. So agents are ultimately taking over.

And if you don't know how like token usage. I think I know, I think I know where you're going with us. Yeah. Well, token usage, it's way more, I guess you could say, there's way more work involved running these agents and there is, you know, if you think back to like

2022 or 2023, like what did we use chat GPT for? Like fairly simple queries. Whereas, you know, what you're running these agents and I mean, I've been using them a lot. The token usage is insane compared to, you know, just regular queries to something like chat GPT. So you have more computing power to develop and, you know, an AI agent and have a due task. for you than it does something simple like chat GPT. So you have higher difficulty tasks. You have more tokens, which is ultimately more demand for TSM because they need to build out more infrastructure.

So the company raised its guidance from around 30% year over year revenue growth to above 30% revenue growth. And they kind of poked at them and asked like how much. And the company mentioned they would probably disclose this next quarter. So the interesting thing here is I think they probably would have given a ballpark if they had it like low, mid, high. So I think high 30% growth is still in the realm of possibilities. And they also mentioned that memory is seeing a massive surge in popularity. And I don't know, what was that probably a month ago you did a segment on that, like the demand for,

for memory overall. Supply issues are extending through 2027. And as a result, TSM is raising prices on them by three to five percent for the next year. I guess I wouldn't really say this is an issue because it's a good thing for TSMC, but they just can't keep up. with demand. And I mean, when you control that much of the supply and demand is through the roof, you kind of set the price. So I think if somebody refuses to pay it, there's probably how many more companies down the line that would. So it's kind of an amazing situation for them to be in. And on the packaging side, this is another bottleneck they're currently going through. They are quadrupling capacity from roughly 35,000 wafers per month in late 2024 to they expect 130,000 by the end of 2026.

apparently Nvidia has locked up over 60% of that, so fully booked through the year. And they had mentioned that this bottleneck kind of directly limits how fast AI infrastructure can grow. And they're kind of spending aggressively to eliminate it. Total 2026 capital expenditures, 52 to 56 billion is kind of trending towards the high end. Yeah, that's crazy. The amount of capital they're spending. I read somewhere too with AI agents. I could also increase the demand.

for CPUs because I think the, yeah, the, they're less GPU. Yeah, they're less GPU intensive. So could be a bit of a tailwind here for an like a AMD or even Intel. Yeah. Yeah, apparently they're a lot more CPU base. Like I don't really, I mean, all I do is use them. I have no idea how they function. I just know they use a lot of tokens.

Claude is kind of stripped back its usage substantially. Like I, you max out there, you know, maximum use. usage like very quick. And I kind of also notice that they they press you to like push things off. So like you'll be doing work and you'll get it to do something else and you're like, oh, are you sure you want to do this now? It's already been a very long session. Like we should come back later and do it, which is kind of interesting. I know they kind of, yeah, they limited the like kind of usage rates. And I would imagine it's because of large scale adoption. I mean, even three months ago, I wasn't using these at all. And now I have like, three or four agents I've built that that do a lot of, you know, Monday and work for me. So, yeah, it's an interesting space to be in. I mean, if, if they're hitting that high end of of growth, like if they get to that high 30% range, I mean, it still looks like the company is pretty cheap here. It always trades pretty cheap, like relative on a forward earnings basis, let's say, but that's mostly, you know, geopolitical situation. I don't really think you'll

ever get like a huge premium on this company. It's traded at that valuation for. a long time, but I mean, yeah, great, great quarter. You could say amazing quarter, but yeah, one that was was largely priced in because I think it fell post earnings. Yeah, I mean, it's still, I mean, it seems like it's doing pretty well here. And I'm just looking at the valuation. I mean, it's not cheap. It's trading at for forward earnings. I think it's trading at 21 price to earning. But considering the growths of price to earning rode below one. so 0.6. So you can make a case. I mean, it's not that expensive either, but I do wonder to what extent the geopolitical risk is not or priced in. That has always been my concern with this company.

It's a company I was interested in like three, four years ago, but I will always a bit uncertain about the whole geopolitical situation with China. And I don't think that's going away anytime soon. So I think for anyone interest in this company, just be aware that this is a risk. with this is probably the biggest risk with this company. And it's fine until it, until it happens or it doesn't happen, but to me that that's something you just have to factor in. Yeah, I mean, if you look to Berkshire,

like they had to, I think they sold their position probably three or four years ago now. And they pretty much said it was the best operated company on the planet, but they had to exit. And I think a large, a large reasoning for that was kind of the, you know, they mentioned that they didn't like the location effectively, which is, you know, why this company is typically always traded cheap.

Yeah. And I mean, with the Berkshire, too, there was, obviously, Munger made some, like some investments in China. I'm pretty sure they had some investment in BYD. So there could have been some pressures too from, I'm not saying there is, but when you have other investments in China where clearly they see Taiwan as, part of China and not as an independent country. So I don't know if that would have played a role. I'm sure they have some pretty good connections there, but it could have played a little bit of a role. But I think we'll keep United Health for another time here. Anything else you wanted to had? Or you're just running out of steam here. Yeah, you're just going to go pick up that piece

of lung that you just coughed that people didn't hear. Well, I mean, and for us on a different subject, of course, just watching the playoffs, Dan's an Oilers fan and the Habs fan. So so far, I guess so far so good. Yeah. Yeah, one-one for the Ab series and the Oilers are playing tonight. So hopefully whoever is listening, their hockey team still in the playoffs. And if they're not, unless you're a Leafs fan, hopefully your team does well in the lottery. The draft lottery. Yeah, exactly. Draft lottery was very popular for me for a very long time. Yeah, yeah, for me for a few years while the abs were there. But no, we really appreciate everyone listening.

We're posting pretty much two videos a week now for the Canadian Investor podcast on YouTube. Dan Fosha and I have started doing, so we started last Friday doing some live podcasts, I think on Fridays. Let's just call them like that. So video podcasts. We have them scheduled for noon on Friday. So make sure you join in.

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So some of the biggest, yeah, companies we sold too early, so some of the mistakes that we did and wish we hadn't sold. So make sure you join in for that. But if not, we'll end it on this. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.