The Canadian Investor - Canada Strong Fund and Intel’s Stunning AI Quarter

Episode Date: April 30, 2026

In this week’s news and earnings episode, Simon and Dan break down the Bank of Canada’s latest rate decision and what it signals for inflation, oil prices, and the Canadian economy. They also dive into the newly announced Canada Strong Fund, Canada’s proposed sovereign wealth fund, and discuss whether it’s smart policy or political branding. The guys also cover Shell’s blockbuster acquisition of ARC Resources, what it means for Canada’s natural gas sector, and why global capital may be starting to view Canada more favorably again. On the earnings side, they discuss Celestica’s AI-fueled growth, Intel’s surprising turnaround, and why demand for CPUs is rising again in the age of AI inference. Finally, they touch on TD’s sudden reversal on Canadian telecom ratings and what it says about sell-side analyst targets. Tickers of Stocks Discussed: CLS, INTC, SHEL, ARX, BCE, T, RCI.B, TU 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 Simo de Rangé. I'm back with Dan Kent. We're back for a news and earnings episode. A lot of stuff going on, Dan, between the BOC, the Bank of Canada announcement. We have also the Canada Strong Fund, so the new sovereign wealth fund that the Canadian government, the Carney government launched just a couple days ago or the announcement of it. A lot of news. We also have earnings season that's in full four, so we'll have a few companies. We'll be talking in there as well. I mean, I wish we had like probably an hour and a half. We'll try to keep it to around 45 minutes. We debated doing an extra episode, but I think we'll just do one this week. Maybe we'll go for two next week. But yeah, lots of stuff to talk about. Yeah. And the crazy thing is I'm pretty sure all, well, not all, but it's alphabet, meta, Amazon, all report after hours today. There might even be more of them like all on.

the same day too. I haven't seen that. Usually they try to spread them around a day or two apart, but yeah, it's, it's going to be a big end of the day too. So next week's episode should be pretty good as well. No, exactly. So a lot of stuff happening. I think it's something I read like 40% of SMP 500 companies are reporting this week, something crazy like that. So there's a lot of companies reporting. So it'll be a fun couple of weeks when we're deep into earning season. Well, well, let's start with a little bit of macro here, the Bank of Canada decision. We are recording this on April 29. So it just happened this morning. I actually watched a live press conference. So in real time, it was interesting to just see Tiff and Rogers answering some of the questions. So they decided to keep rates unchanged at 2.25%. This was widely expected. I talked with Dan Foch about it last Friday on our YouTube live, which by the way we will be doing this week, but also posting it as a podcast on. Saturday. So if you're interested in that, I'm sure we'll be talking a bit more in depth about the Bank of Canada announcement, the Fed announcement also coming later today and a few other topics. Now to get back to this, they believe the interest rate is appropriate and things play out along with their, if things play out along with their base case, they don't anticipate any major changes in terms of the policy rate. Their projections haven't changed materially from earlier this year in our base on tariffs, large.

remaining at current levels. So clearly, it could vary in terms of are they raising or lowering rates depending if tariffs actually switch here. If tariffs are significantly higher, they said obviously they would likely consider lowering rates. They are projecting slow growth for the rest of 2026, around 1.2%, and then slightly higher for 2027 and then slightly higher again for 2028. And although consumers are squeezed by higher prices, it's also contributing to GDP in Canada since we are net oil exporter. And on that note, I think we've talked about that before, where yes, if you have the U.S. dollars straightening because there is a rush for safety in terms of actual U.S. dollars, well, it's been a little bit offset. And they touch on that on the

currency level where Canada's currency has been essentially about the same throughout this whole episode since the war of Iran started, whereas a lot of other countries, it's actually, the U.S. is actually strengthening versus those other currencies. So clearly, I think they're saying that, but it's also an example, I guess, it shows how much more demand there is for the Canadian dollar when oil is higher. So that's not surprising here. They expect inflation to come in at around 3% in April and that it is their forecast that it will come down around the 2% target early next year. They believe that oil prices will ease.

They expect oil to come down around $75 per barrel by the middle of next year. And it's kind of funny that 2% target because it always feels like, oh, it's coming. It's getting to that target. It's always in the future. I mean, I'll give the bank a little bit of credit here. It had come down to their target in the last little while. I think if it wouldn't, like, if this wouldn't happen, like if a will wouldn't have gone to whatever, maybe 110, 115 a barrel, like, I think they probably would have got down to that 2%

target, but there always kind of seems to be something in the way. I mean, oils up what, like 7, 8% today? Yeah, it's almost 107 bucks a barrel. So, difficult to say, like, if the conflict doesn't go. away, obviously, I don't think we're getting down to 75 bucks a barrel. And if we don't get down to 75 bucks a barrel, I highly doubt we'll even get to a 3% inflation target just because of how impactful that would be like across the board. Yeah, I mean, there's always the argument that the longer these higher prices stay in place and the higher they are, well, you have people

that will cut back on other things to actually purchase gasoline, right? There is inelasticity of demand, meaning that people actually have to buy gasoline. If you don't have a choice but to use your car to go to work and public transportation is just not an option for you, well, I mean, you're going to have to cut back elsewhere because if you're not working, you're even worse off. So clearly you're going to have to make some sacrifices. But there is, in economic theory, there is a point to which that prices remain so high for such a long period of time that you do start getting some demand destruction.

So we'll have to see whether that does happen. But I thought it was interesting, yeah, that there is still forecasting $75 per barrel. Clearly, who knows what will happen? Well, with the Iran war, we've talked enough about it. So we'll have to see where that go. And lastly, here they said in Canada, consumer and government spending are contributing to growth while trading global uncertainty are definitely impacting growth negatively. So they're definitely trying to juggle these things again like they usually do.

They're really not sure they want to see where things are going. We'll have to see in terms of rates. But the sense I am getting, especially from this press conference and then Foch and I, when we talked about it last Friday, it was kind of the same thing where we do expect them to probably stand path for a little bit of time here as they see how things are playing out. I think they're just afraid of acting to. quickly in making the wrong decision, but sometimes taking too long to act can also have a pretty adverse impact.

So we'll have to see, but that's the gist of it. Not too much else to add here. So let's move on. I know it's something you were wanting to talk about. You've talked about it recently, I think, on the podcast where you said, you know, there was a TD analyst that downgraded the telcos. And I guess that analyst did an outface, right? Yeah.

So, I mean, this would have been a while ago. I can't even remember when I did that that segment about the sell side targets. And maybe like a month or something like that, yeah? No, no, I did one like a full segment on it. Probably would have been a year ago at least, but kind of just how like deep rooted they are in like big conflicts of interest, bias, all that type of stuff. So yeah, I think it was three weeks. Well, three weeks ago the article came out and then I did did a segment on it about how TD had moved. all three telecoms to hold and cut price targets. So there's one, I'm pretty sure there's one guy,

this analyst that has covered the telecoms over at TD Cowan, I believe it is, for like 30 some years. And this had been like the first time that he had ever gone to a hold rating on all three companies. So the article, which we went over, it talked about the pricing more, the lack of growth, etc. The declining ARPUs and the exact same analyst this happened a couple of days ago kind of flipped a script. So he's issued buy ratings on the companies and bump price targets upwards. So I don't know how much on BC or Rogers. I kind of only paid attention to the tell us one, but he effectively cut the target three weeks ago. I kind of said they need to cut the dividend. Like he doesn't know where the growth is going to come from. And then he's increased

increasing his target now, putting it to buy and saying that, you know, the dividend is attractive, could be cut, but is attractive. And that, you know, there's too many. I can't remember the exact words because it was a Globe and Mail article. It was paywalled. But there was some mentions about how, like, growth is looking good in earnings. Like, absolute flip the script from three weeks ago. And, I mean, you look at the article in the start of April, super bearish. I mean, again, raise the ball.

bottom ARPU is declining, no route to growth. Like, I don't know. It's just kind of, it's weird to me. Like nothing has changed over this three week time span. So maybe you had a dream. You had a dream that, uh, yeah, sorry that, uh, tell us will start just ripping that something will happen. Yeah, that's the only thing I can really think about.

Yeah. I think there's something else under the surface here. That's, uh, and I mean, there was some mention on Val. as well, becoming more attractive. But like the telecoms, they're only down like five or six percent each since he put out the initial article. Like if you read the initial article or the initial like interview, how bearish it was, like a six percent dip doesn't really justify becoming all of a sudden bullish.

So in my opinion, I think there's two things that could have possibly happened here. So the first one being the telecoms went to TD and complained. I mean, whatever may be threatened to cut them out of future. bond issuances, like equity issuances, like underwriting, all that type of stuff. Or TD on the flip side said, hey, we can't do this. They might cut us out of, you know, investment banking. They might go to another bank. There's plenty of other banks that can do the work.

So why are we issuing? Because these telecoms are big money for those banks. Like they're consistently issuing debt, equity, all that type of stuff. So like there is, there's, there is Canadian regulations that kind of require these arms of the bank to be operated independently, but you'd kind of be crazy to think that this type of stuff doesn't exist. But, I mean, it's just another reason to put absolutely no weighting into these sell side analyst price targets.

Yeah. Something seems weird here. And obviously, it's speculation by me, pure speculation to think that this is, you know, there's some underlying pressure here for those targets to be flipped. But I mean, come on. But also, like, what impact do the telcos think? It's going to have on this stock price. The market's not stupid.

Like, the stocks have been tanking because their results are terrible. Like, that's as, like, as simple as that. Like, do you really think an analyst changing their rating from neutral to buy will impact people buying the stock when anyone with half a brain can see that? It's not a business that's doing all that well right now. It doesn't mean it won't turn around, especially if we start seeing some population growth a year or two down the line, but right now, the reality is the average revenue per user is really, really going down and they're competing against one another for business and they're

racing to the bottom. Like, this is not a good business model, like at least not in the short term. Yeah, it's just, I don't even know if it was maybe an element of the telecoms thinking that it would impact their, the angle that I see more likely is the fact that TD might have said, like, shouldn't be doing this like because they give us a lot of business that's it that's the only thing i can think of again pure speculation but like what has happened in the course of three weeks to completely flip this like when i first seen it i thought it might have been a different analyst that issued the targets but it's the exact same one so i mean over the span of three weeks

when not nothing has happened whatsoever like what's going on behind the scenes it's just weird to me which again and i mean i'll go over this on the monday episode because we're doing the 10 mistakes. Like the, the sell side targets is, like spoiler alert is one of those. And I kind of go into it a bit more there. But like these,

these price targets, like, just ignore them. At least like don't use them in terms of any sort of research target point that you think the price is going to get at. Because most of these are just, there's just so much underlying things going on here that they first can't be trusted. Second are often way late to the party.

I mean, look to go easy. They didn't cut. those targets until they absolutely had to, until the company wiped out a year's worth of net income, then they finally turned bearish. But yeah, it seemed weird that these targets had flipped in such a short time span. Yeah. So, and for those for the Monday episode, we have a fun one coming up. So we're going to be talking about 10 common mistakes Canadian investors make and mistakes you don't want to be doing. So it'll be a fun episode. Having cash on hand is essential for

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do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there

and follow me, search me up, some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas, and using the analytics tools. So go ahead, blossom social in the app store, and I'll see you there. 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.

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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. Before we move on, maybe just as I mentioned, we didn't put this in our notes, but news came out this week that Rogers is looking to offer buyout packages to what, like around 40% of their workforce. 50 or something. Yeah, 40 to 50% of their workforce now. To keep in mind, I think typically from what I've read, these kind of packages will be accepted by about 10, 15% of those that are offered these packages. So oftentimes when companies do this, it might sound like a large number,

but they have some models that are pretty, like they try to anticipate and predict how many people will actually accept those packages. And I remember reading that obviously if they don't reach the amount of people they'd like to accept those packages, they may look at layoffs afterwards. So clearly Rogers is trying to cut costs. But it was kind of surprising to see that. There's been quite a few layoffs from pretty large companies. I know a lot of them are AI related.

In the case of Roger, I think, is just trying to cut costs. Maybe there is a little bit of stuff that's AI related where they're able to achieve efficiencies with AI, but definitely newsworthy because the Rogers, I think, has about 25,000 employees. Yeah, if I remember credit. Yeah, not too bad. I'm just going on memory. Yeah. I mean, it's, yeah, when you see the big headline number, like Rogers isn't going to cut 50% of its staff. I think like it's going to be lower than that, but they kind of gave the packages out to 50%. It's kind of what the telecoms need to do is cut. Yeah. Like they, they've spent, spend, spend, spend for a very long time.

And now they kind of need to flip the script and cut, cut, cut, cut. So, yeah. No, exactly. And I think if more people accept, there were more employees accepted than not, then oftentimes the company just ends up taking a bigger hit short term. But then you have more efficiencies down the line, obviously assuming that it doesn't impact operation. I think Shaw did that years ago where they offered packages and more people actually took it

than they thought. So, yeah. So they had like a big hit on the one year, but then they actually end up doing having a lot of savings afterwards. But enough of that. Let's move on here. Some other big news this week. So the Canadian government came out with his spring economic update. But before that, Carney, T's and obviously the government of Canada that they were coming out with Canada's brand new Canada first sovereign wealth fund.

So it was interesting. It's called the Canada Strong Fund. The name obviously has a lot to do with marketing, I'm sure. But typically a sovereign wealth fund is a bit different than this. So typically a sovereign wealth fund will be funded by government surpluses. So think about Norway with their oil and gas revenues or the UAE. So they have these sovereign wealth funds. But in the case of Canada, it'll be funded with debt because the Canadian government does not have

a surplus. And I think a more appropriate term would be a strategic investment fund. That's probably more appropriate. And clearly the idea is that the government will have to borrow money. They'll probably, they'll have to issue bonds to pay for this. So the idea is essentially investing in Canadian projects and companies that offer will also offer a good return, hopefully a higher return than their borrowing cost. So they're essentially doing this a little bit on. margin. It doesn't mean that it'll kind of be a net contribution to deficit because clearly if they do have some returns and some investment gains, it could be beneficial for them down the line. But it just remains that they're still boring money or they will be boring money

to make these investments. Anything you want to add before I continue on this here? No, I was going to say, I mean, yeah, the sovereign debt fund more like it. Because I mean, it's, yeah, they're borrowing to fund it. So not really the same as the other two countries you brought up in any regard. No, exactly. I think there's also Singapore that would have one. There's a bunch of examples worldwide here. And there will be an initial federal contribution of $25 billion. The stated goal of the fund is to focus on building Canada and achieve market returns for Canadian. It's actually nice in writing, but much charter to achieve in reality because the likelihood is that these are two competing mandates. So at some point, something will probably have to give where they'll have to put priority

in one or the other mandate. They're looking to have their cake and eating it too. But we see time and time again, when you have two mandates that can be a bit diverging, because people may say, well, why not? Why can't you do both? Well, the reality is oftentimes if you're really doing strategic investment to grow Canada for the future, these investments could take a very long time to actually provide some returns. And sometimes they're not really investments.

Sure, you may get some returns in other way economically, but you may not actually get returns on your investment. So I think this is where the two mandates is a little bit of a head scratcher here. the fund, though, would invest strategically alongside the private sector in Canadian projects and companies. And the companies is really key. It caught my attention because I don't think it was in the, oh yeah, it was in the outline, but I saw it in the spring update as well. So that is a little bit from the U.S. playbook. Obviously, Canadians are not fans of the U.S. government right now as a whole of Trump and rightfully so obviously they're rattling a lot of feathers. I don't need to go over everything we've seen since Trump took office back last year. But the reality is this is their

playbook. Dave have stake in Intel. I think Steel Co or maybe not Steel Co. But they have a stake in steel company. Can't remember which one. Yeah, it was, didn't they buy a piece of a gold company as well or no? I can't remember. I'm not sure, but they have a piece into rare mineral. company as well. So this is nothing kind of new here. They're actually, I think to me, it's very similar to what the Trump government is doing, where they identify strategic companies or industries and they make investments, actually equity investments in those kind of companies. The type of projects that they would consider investing in are projects relating to clean and conventional energy, critical minerals, agriculture, and infrastructure. The returns of the funding,

will be reinvested in the fund and other projects over time. They may also consider other sources of capital for the funds, such as unlocking the value of federal assets and asset optimization. A word or two words, asset optimization, that doesn't really mean anything, but that's okay. They like to put it in there because that could mean a whole sort of different things, but that's okay. That's political talk. Now, just to be clear here, I don't really care that it's a liberal or if it would be a

conservative government doing this, I would approach this the exact same way. I think it's just there are some limitations to what they're trying to do and politicians will be politicians. They will launch a retail investment product that will allow individual Canadian investor to participate in the fund and benefit from its financial returns. I would assume that the fund will likely have kind of a dual structure. They're going to have the government stake, the retail investing stake and then maybe even like institutional stake i can see them having encouraging institutional investors like pension funds or large corporations and you know joining in on that i'm not how exactly sure how it would work they didn't provide all that many details just yet they said they would be providing

more details in the coming months and then the returns from the projects whether it's dividends interest capital gains get distributed to each of these stakeholders based on ownership. Retail investors will likely have the option to reinvest the returns in the fund as well. Still kind of curious to see what the structure will look like. But my honest sake here before we move on is this means the government will be using board money to put into this fund like we just talked about. So we'll have to see how this affects the budget. I don't think they really talked about that all that much for the spring update. I have some reservation. If this will be made well, manage and there are definitely a certain risk of misappropriation, mismanagement,

and efficiency, I mean, you are dealing with a government. So even if they try to do everything above board, if you deal with a government, you know there's a whole lot of red tape. Like, it's not as efficient as the private sector. The reality, though, and I will give the Carney government props for this, and I think a lot of people that don't love this government kind of forget to talk about this part. but the reality is there are just some large-scale projects that probably just can't be funded by private investment alone.

Like, that's just the reality of things, right? Like, it just, you can think of a major project. Like, if they were to build a pipeline from Alberta all the way to the east, I'm sure there'd be private sector companies that would be part of it. But I don't know if that could be done solely by private investments. Like that is a real question. Like I'm not quite sure. Or if you start doing a high speed train that goes from extremely long distances, like I don't know if these can all be funded by private sector.

And I think that's where the fund like this could be useful. And I think people that are completely against it are missing this point. I think you're just, there's countless example in the past where the government has to step in. I mean, if the private sector could do everything, like all our roads would be. private. Right. Nobody will fund it. No, exactly.

Yeah. So it's, it would not really be feasible to have all these roads private and have tolls everywhere on residential streets and so on. So that's just an example. So I think the key will make sure that it's, there's a strong investment process in place while also being efficient in its capital allocation, not an easy thing to do, but potentially with AI, for example, new AI tools, maybe there are ways to speed up the process while keeping a high level of transparency

and prudent capital allocation and all of that. So that's kind of my big take from the retail product perspective. I think this would only make sense if you're a retail investor, you want to support this fund because I think the likelihood of underperformance is quite high because they have those two goals, right? So when you have two goals like this, your primary goal is not returns. it is market or returns similar to the market by the same time it's also making these strategic investments like at some point you have like those gold would diverge a little bit so you just have to be careful

depending how the retail product actually plays out just realize what you're investing it and don't necessarily expect world beating returns if you're comfortable with that but you really want to invest in that because you want to help grow the Canadian income. That's fine, but just don't necessarily expect world beating returns. Yeah. Well, I think that's the conflict is the two mandates. Like, there's going to be a lot of projects that really don't provide all that good of returns so they don't get much capital that contribute to the country's growth,

but will not provide market level returns. So, I mean, the one good way, and I haven't read into this all that much, they could probably make it more popular, is tax shelter it. make an investment in it, you know, tax-free, I imagine, because then you can earn returns below market returns and come out, you know, probably say net neutral. But the interesting thing is like how in terms of the public companies, like what companies, how do they pick them? Why are they picking them? I mean, I imagine they'll have like an independent board with all of this that'll like make the decisions. But I don't know. It seems pretty interesting. Yeah, it's supposed to be set up as an

independent Crown, or independent arms-length Crown Corporation. Like CPP and same sort of. Yeah, like, or yeah, like BDC, Export Development, Canada. Yeah. There is a bunch of different Crown Corporation that are arms-length, but I know enough about Crown Corporation to know that the shareholders, those Crown Corporation, is the federal government. So they always, ultimately, they always report to the federal government.

You can say it's arm's length all you want. the reality, it still reports to you. So, sure, they have a mandate, but, you know, there's always going to be space for, you know, some direction coming from the top. Like, okay, we really want this project, like, make it work. Yeah. We got to save some jobs or whatever it may be, you know what I mean? Like, they did that with, I can't remember that steel company that they ended up loaning a bunch of money to. So does there come a conflict in there where, you know, they're looking to save a bunch of jobs?

on a project that's probably not going to yield all that higher returns. That's where you get that conflict in terms of the two mandates. Yeah, it's an interesting fun. I think tax sheltering it would be a no-brainer to me to make it more popular. It'll be interesting to see how it goes. No, I think that's a good point. Yeah, you tax shelter it regardless whether it's in a registered account. Like, I'm sure they will allow it.

Yeah. Well, why not? I mean, it's the federal. They're the ones that created the TFSA. So they can definitely make sure that it's eligible for. those accounts or they can just say, you know what? Maybe you're right. It's just basically, or you get, maybe it's not fully tax shelter, but maybe the intent,

in terms of getting, let's say, a capital gain stacks on half of your gains, maybe it's like on only a quarter of your gain. Give some sort of an incentive. Some sort, or you have it in your TFS in that it's fully tax sheltered. Like if you want big money flowing into this, yeah, get it, you know, give some sort of tax incentive to do it and then you know you get more capital into canadian companies canadian projects but we'll see how it goes yeah exactly so we'll keep an eye on it especially on the retail investing part clearly that component applies to the podcast because we're an investing

podcast so we'll keep that in mind as there's more details we'll talk about it on the podcast 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 switched to the new EQ Bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interrachee 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 EQBank.ca slash business. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians. plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept

of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning duolingo style education lessons that are completely. completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me, search me up, some of the YouTubers and influencers and podcasters that you might know. I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. There is an old saying in investing. It's not about timing the market,

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Ready to invest? Head over to Questrade.com, Open and fund your account with code TCI and receive $50. Conditions apply. So let's move on here. Talk about some actual earnings. So Celestica, the dual listed company, reported and looks like they had a pretty good quarter. They did have a good quarter, but it fell, I think it was down 15% or so when they reported.

This is a company, I will admit, that I was just completely wrong on for a few years. but the headline numbers are just massive for this company. It was, I remember when we were doing that segment on the top 30 stocks, the top 30 largest stocks. Like in 2021, I think this was like a small cap stock. Now it's among the 30 largest names in the country. And we have to make a double take. We like, we're like, this isn't in there, but no, it was. Yeah.

Yeah. It's, uh, I mean, for a very long time, it was a poorly. operated business. I mean, profit struggled, growth was non-existent. AI, like, it, it fell in their lap for the most part. And I think the big shift where Celestica moved from is just constructing products to designing. So previously the company had like razor thin margins. I think their operating margins were like three or four percent. It was pretty much just an assembly company. Now they actually have shifted to designing systems for the hyperscalers. So that not only increased margins, but it creates kind of a stickiness in regards to the revenue

because once a system is designed, it's unlikely they'll go away from Celesteca. And this company kind of provides the guts of a data center. So server racks, cooling systems, power delivery, network switches, etc. On the quarter, revenue grew by 50%. Earnings by 80%, free cash flow by 47%. So just to give you an idea of how much AI has vaulted this company, revenue effectively went nowhere from 2012 to 2022.

Like it was pretty much flat from that entire period, maybe a little bit of an increase. And when we look to revenue from 2022 to 2026, it's pretty much doubled. Yeah, you have the chart up there from 2016 at least. There's effectively no movement until, you know, around the time where. Oh, yeah, there was movement downwards. Yeah. Yeah, it was like, it was a small cap tech stop.

Well, kind of manufacturing. manufacturing stock, I guess you'd call for a very long time. So a company hit 8% operating margins. So this is the first time they've ever done it. And connectivity and cloud solutions now makes up 80% of the business and is growing at a 70% plus clip. So a year ago, this was around 70% of the business. And this is going to be the bulk of the AI growth. This is the networking switches, the routers, all that type of stuff.

It's kind of where they have the huge hyperscalor customer basis. It also includes stuff like the AI servers, machinery doing the work, the server rack, the cooling, all that type of stuff. This segment alone has doubled revenue over the last few quarters. So not even like year over year, just a few quarters. So hardware platform solutions, that's what I'm kind of talking about with their design segment that grew 63% year over year. And this is kind of the main segment pulling the margin profile up.

So if you own this company, you want to see this segment continue to make up a larger portion of revenue because ultimately it will continue to improve the margin profile. and it looks like they raise guidance. So revenue bump from $17 billion to $19 billion, earnings from $875 a share to $10.15, and operating margins from $7.8 to $8.1. So I mean, it just kind of seems to me like the company is maybe just a bit too expensive, and that's why it sold off.

Like the run it's had over the last while, it probably needed to absolutely crush earnings and just didn't do that. And another note, And this is probably, I would actually argue that, you know, outside of valuation, this is definitely the biggest risk for this company. Like, almost no question. The concentration of clients is increasing. So it doesn't name its customers, but I mean, it's, it's very safe to say it's the big hyperscalers. The top client accounts for more than a third of revenue.

Top three customers make up around 65%, just over 65%. So this is actually increasing dramatically. So in the first quarter of 2025, the top three customers made up 50%. So, I mean, I don't know how difficult it would be for the hyperscalers to go elsewhere, but I mean, if they lost one of those major clients, I can't even imagine what the stock price would do. Again, I'm not sure how likely that is, but it's kind of one of the main reasons, like that concentration risk is kind of one of the main reasons I watch this thing, like, you know, go five or six hundred percent over the last few years from the sidelines. but it's been a crazy run for this company. There's no doubt going to be growth moving forward,

but it just, you know, it seems like it's priced in at that point, but I said that when it was 150. Yeah, I mean, concentration risk is always, it's a tricky one because companies also rarely devolved. So you have to kind of figure out, try to guess, you know, connect the dots and figure out what who the clients are. But yeah, even Nvidia, right? they never really say who their clients are.

Obviously, it's kind of easy to figure out which one, but it's always something to keep in mind because when you're really concentrated, you just need one of these customers to, you know, to pull out and just go somewhere else and you're going to have an issue, a big issue with revenues. Yeah, and again, I mean,

a lot of people listening probably know this company more, like how easy it would be for them to lose a client. But let's just say you lost your top client making up 35% of your revenue. I mean, not only are you probably going to nosedive on that, but there's also going to be fears of could you lose your other customers, which would probably just amplify it even further. But if you own this one or you're looking at it,

I mean, that concentration is definitely something you have to take into consideration. But, yeah, I'm not sure why the company dropped 15%. I mean, it beat estimates, raise guidance, just kind of price to perfection here. and the market just needed a blowout. That's my thoughts on it. Okay, yeah, and I don't have too much to add here. Let's move on here.

Some big news that came out for the oil patch or the, I guess, the more the natural gas patch. What you want to call it. I'm trying to find the name of the actual. So the Motney Shell basis. Yeah, exactly. So Shell to buy our resources. So on Monday, Shell announced that it had agreed to purchase. ARC Resources, take care ARX.T.O for 13.6 billion.

So really massive acquisition here. This is approximately $3,2.80 per share in Canadian dollars. Right now, the market seems to be prising it with a pretty high degree of certainty that this will go through because it's trading about 3184. Obviously, there is some currency exchange calculation you have to do, but that's just a rough ideas. So the market, I mean, there's not a big arbitrage between, typically that says the market thinks it will go through. Plus, I would be surprised and you tell me what you think here, to see the federal government block a British company from acquiring a Canadian natural gas producer, because

we just talk about the Canada Strong Fund. You're trying to encourage investment, whether this investment is domestic or international, you want to encourage investment. And when you're thinking internationally, you're starting this fund, you would kind of be saying, okay, like, we're actually going to nix this acquisition. It's a bit of mixed messaging to potential foreign investment in Canada if the government starts nixing acquisition like this, especially from a company that's based in a friendly nation. Yeah, I don't see it happening.

I mean, the thing is, the shell is kind of, over the years has kind of exited the Canadian oil sands. Like, I know they've sold. It's coming back now. Yeah. I mean, I guess not into oil. I mean, I haven't. When I was up there, it's kind of like, I don't even think of Shell as like an international

company, even though it is. Like when I worked up there, it was kind of like Shell was all over the place. You just kind of thought of them as a big player in the oil sands. But they've kind of dumped those assets. And now they're getting into natural gas. I mean, there's been a ton of M&A in this space over the last, like last week when we talked about our mistakes for selling earlier, or whatever, like New Vista, they just got bought by Oventive for, I can't even remember.

It wasn't as large as this, but there's a lot of consolidation here. I mean, especially from larger players like buying up these natural gas companies, but I don't see them nixing it. I mean, maybe if it was a U.S. company, I wonder if it would get more interesting in that regard. But, I mean, the market's pretty much pricing it as if it'll go through for sure. Yeah, as a done deal pretty much. Yeah.

Like I said, the cost is approximately 13.6 billion. It actually goes up to. 16.41, you include the debt and liabilities that they're taking on. The deal will be a combination of cash and shares. Each share will receive $8.20 in cash and 0.4 shares of Shell. And for context, Shell had been facing more and more questions about what it was planning to do for growth and especially bolster the company's fossil fuel reserves. And the deal will help Shell grow its production output by around 4% annually between now

in 2030. Without this deal, it would have been around 1% annually. So definitely a good bump here for Shell. That is an absolutely massive business. And the acquisition ties in well with its ownership in LNG Canada, which is a large liquefied natural gas export project located in Kidamad, BC. Hopefully I did not. Yep.

No. Put for that name. Our reserves are primarily located, like I said, at the beginning of that, the, in the Montney Shell Basin that spans across BC and Alberta. There are definitely are low production cost reserve, and the project is aimed at exporting natural gas to Asia. It started operating last summer, so the LNG Canada project here, and they're supposed to be a phase two of the project.

Well, I mean, they're working on phase two of the project. It's not sure if it will go ahead or not. It seems like there should be an investment decision for phase two by the end of this year from what I've read. and Shell actually owns 40% of that project. So it definitely ties in well with the assets that they already own there. And the art deal will be Shell's biggest acquisition in the past decade. The transaction is expected to close in the second half of 2026.

So definitely kind of some big news here. Clearly a boost to for Canadian natural gas company. Tourmaline got quite a nice boost on the news because if you've been thinking about energy prices going up, it's been a completely opposite for natural gas in North America. So natural gas is very much a localized thing. We've talked about that before where it's very energy intensive and requires these massive facilities to liquefy it. So it does, so this phase two of the project could be a big tailwind in terms of being able to export natural gas, especially to Asia, while even more so. But it does also explain the divergence and prices between what we see here in North America versus Europe versus Asia.

Yeah, Tourmaline has kind of struggled the last while here. But I was kind of trying to. I know as a shareholder. Yeah, I'm well aware. Yeah. Yeah. And I follow the company quite a bit. But I was trying to look up like other like smaller natural gas players in Canada.

And there's really not a lot left. I think Pato has a decent amount of natural gas. Like I'm talking like smaller cap that are probably, you know, could be eyed up for, for acquisition as well. But I mean, new Vista's gone. Arc has gone now. So I mean, I would expect more deals in this space because I think a lot of these companies are fairly cheap. Like, what was the premium to Arc? It was a pretty big premium.

Pretty sure it was like 22% or something like that. Yeah, I think it was around there. I don't have it right in front of me. Let me. Yeah. So. 27%. Yeah, there you go.

So I mean, these companies are cheap. And these other companies are, they probably are printing cash right now if they have any sort of oil exposure. So you could see more movement in this space for sure. Yeah. And I think Canada is pretty well positioned for that. Not only on oil and gas standpoint, but also like investments in natural resources in Canada as a whole. Right. what we're seeing is with the geopolitical situation more and more unpredictable now and who

knows what will happen in the years to come, Canada is starting to look like a pretty decent place to invest when you're looking to minimize those type of risk. In the past, it probably wouldn't have been the most attractive place because of taxes, but also in the last 10, 15 years roughly, especially the big part of Trudeau's government. They were not very friendly to the natural resources sector as a whole. It was all about green energy. And I think we have to make sure that we're, I think, having a good energy policy, not only green energy, but also conventional energy is important.

And natural resource and capitalizing on that is really important as a country to really maximize what we actually have in terms of like how fortunate we hired to have those resources. but the fact that Canada for so far has been kind of a way of these geopolitical conflicts of these wars that we've seen overseas and were relatively stable politically in Canada compared to other countries as well. I mean, if I'm a company, it starts becoming more and more attractive to make investments in Canada. Like, I don't know about you, but to me, when I'm seeing everything that's going on,

Canada sure seems to be more attractive for at least investing natural resources. Yeah, I mean, we still have some issues. I mean, we had Canadian natural defer a gigantic expansion of their, I think it was like Jack Pine, their oil sands mine, because they just have no idea on regulatory issues, like carbon pricing and things like that. So a ways to go, but I mean, obviously it is looking more attractive because you have Shell, you know, international company kind of entering the space. So yeah, it'll be interesting.

I have nothing else that. It's easier to change regulation than in. is to, you know, change to have impact on geopolitical tensions between countries. I'll just say that. Yeah, it's easier to do that. So I agree with you, but I think those are things that are easier fixed, especially if the current government, you know, it's a majority now. So it'll be easier for them to make those kind of changes. Yeah. The situation on a regulatory standpoint is is very easy to fix to get money flowing back into the industry. There's no doubt. It's just a matter of whether or not he'll do it or not.

Yeah, exactly. I think it's Dumeberg that was saying it's easier to change the politics than it is to change the ground or the underlying resources that you have access to. So something to keep in mind here. And we'll finish this episode here with Intel earnings. So Intel, back from the dead, huh, pretty much? No, not quite. But revenues blue pass guidance that was provided by Intel earlier this year.

they did $13.6 billion in revenue, and they had guided for a range between 11.7 to 12.7. So they did not only beat their guidance. They just shattered it. And that was in just, what, in about three months different, I think, when they issued that guidance. So pretty impressive.

Demand for its products continues to outpace supply, especially for their Zeon server CPUs, which is fueled by the built-out for AI infrastructure. Surprise, surprise. CPU demand is increasing for AI usage, whereas in the last few years, it was mostly a GPU story. Now, training is still very GPU heavy, but inference, so deploying models into real-world use, still relies heavily on GPUs, but also increases CPU demand across the broader compute stack. So that's where they're seeing a lot of the demand, and that's the kind of shift you're starting to see here.

AI is now fueling more than 60% of their revenue and grew 40% year over year. Gross margins also came in much higher than expected, but operating margins were still negative. So they're still losing money, but they're losing less. And revenues is expected to grow between 2% and 9% on a sequential basis. So quarter over quarter, not year. So that's really impressive. Intel, like I said, is still losing money on both net income and free cashable basis. but things are improving significantly.

So clearly, you know, really impressive for Intel. I mean, if you bought this at the beginning of the year, I think you almost have like a 3x. Like it's pretty, pretty wild. Like, yeah. It's been wild over the last. Yeah, it's up year to date. It's up 150%.

That's pretty crazy. If you got in at the bottoms, which would have been like, well, the bottoms over the last while, which would have been summer of 2025. Well, one year it's up 360. Yeah. Yeah. I seen a tweet on X that it said like, you know, Intel exceeds its 2000.com bubble price proving that by the dip works. It only took 26 years. But yeah, it finally exceeded its price from, you know, the peaks in like August of 2000. The chart is wild. It is just there. Yeah. Directly up. Like, you know, it's flat for like the better part of three, four, months and then just straight north.

You should have followed the U.S. government and started the, yeah, in a position when they took a stake into it. But yeah, I mean, that was probably a sign that they would not let Intel fail because it was too important strategically. And I think this is just, it's a good place to wrap the podcast up, but just to finish on this, it just goes to show that, look, I think more and more we just have to get used to governments around the world looking at different times. of companies or resources and starting to invest in what they perceive as being strategic

for national interest perspective. Yeah, national interest, national security, you name it. And I think more and more, and with the start of COVID, I think COVID really open a lot of eyes. And if we think early in COVID, the PPP, right, the protective equipment, it was all being made in China. So we had shortages here. And I think this was the first thing that really.

started opening the eyes of people and then you saw more and more how reliant we were on China in the past five years. And I think there's just governments around the world that are saying, okay, we have to be less reliant on China, but also have be self-sufficient from an energy standpoint. You're seeing in Europe, I think the German chancellor, I think mentioned something about like, yeah, if we hadn't been so stupid like 10, 15 years ago to like close down all our nuclear power plants, we'd be a much better situation in terms of being self-sufficient from an energy perspective or like not as dire as they are right now. So I think you're seeing more and more governments. And I think Canada is just going on that path. This is just a trend that you'll

be seeing, just zeroing on certain industries that are just really important and strategic and projects that are also important and strategic. Yeah, I mean, you look to that chem trade situation from like a few weeks ago or whatever where you know it's producing like 70% of the chlorine for for Canada and the only solution if they don't rebuild that plant is to you know kind of source it from China and I mean that that plant could be a perfectly reasonable example of a project they might take on you know kind of you know in chem trade things like that so yeah I mean countries have realized now that you need to be more independent. But they've also kind of, it's kind of a bit of a space race in regards to AI. I mean,

you're talking about like all these governments are going to want to have the top end AI tech. It's why you see the US, you know, kind of limiting how much ASML can send the tech to China, things like that. So yeah, yeah, it's a wild time. I think there's emphasis on resilience now over like pure efficiency, right? Yes. Where it used to be like let's be as efficient as we can on time just in time the like manufacturing was always a big thing now it's redundancy there's a premium for that you don't have to necessarily always get the lowest cost as long as you're more resilient i think that that's kind of where we're at it'll be interesting and obviously for investors it's something to think about because yeah i know like some people don't like to invest

in natural resources company that's fine but i think there's going to be a lot of those type of companies that will enter the strategic aspect of it. Oh, yes. Because they are very strategically important. And it's just maybe something to keep in the back of your mind when you're starting to think about investment thesis and companies that, okay, whether it's Canada, the US, okay, these, this is a company that potentially the, the US or Canadian government could, you know, could see a big national interest into making sure that they're successful here.

whatever that looks. I obviously never know whether that's going to happen, whether they'll start a stake in the company or they'll provide some maybe below market financing, whatever it is. But it's just something to keep in mind because we saw it with the U.S. And now with the Canada Strong Fund, we will be seeing it with Canada as well. So I think it's just a new reality of the world we live in. Yeah, plain and simple. Yeah, I mean, I guess to go back to what we talked about it, to start the,

the precious, well, kind of the rare earth mineral type company that the U.S. bought was actually, or took a stake in was actually a Canadian company. It was lithium Americas. So I think they trade under the ticker LAC. I don't know how much they bought, but it was, it was in late 2025, I think. But yeah, they produced lithium effectively. Like I think I don't know the company very well. I'm pretty sure all of their minds are in the United States. So that's probably why it happened. but yeah, they're Canadian company that the U.S. kind of took a piece of. Okay.

No, I think, yeah, that's a great example. But I think that's a good spot to call it. It was a fun episode, really wide-ranging, some political announcement with the Canada Strong Fund, Bank of Canada, some earnings on both the Canadian and U.S. side, some companies being bought out, like a bit of everything, just not lacking any news. So that's always fun for us.

Thank you for listening and we will be back on Monday for that episode on investing 10 common mistakes that Canadian investor makes. So make sure you tune in for that. Definitely some of them that I've made in the past too. So make sure you tune in on Monday. It'll be a fun episode. 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.