AI: DeepSeek's sudden emergence has cracked the bullish thesis, but demand will endure or grow. The reason is Jevons paradox (the theory that states that making a resource more efficient can lead to increased demand) and benefit the megatech companies. But DeepSeek proves that you can use older, cheaper semis than Nvidia's to get the same job done using clever software. Also, DS is open source, whereas North American AI is closed source. So, free versions readily available may be a challenge for tech companies.
They've had mixed results in past years. They are, though, ramping up an Ontario project to fill capacity, as they pay down their heavy debt. At $2,800 gold and at full capacity, the company expects to pay down all debt in 3 years. Stick with it. It's expected for gold to keep rising, some saying $3,000.
What's changed is that in the last conference call, management suggested the dividend is under review, with the payout ratio "elevated". Institutional investors are encouraging BCE to cut it and use the savings to pay debt or fund growth. A cut could trigger a relief rally. The risk/reward isn't attractive.
Most attractive of the Mag 7 at 21x PE. Have many businesses--YouTube, search, Android, Chrome, Waymo. It's worth more than the current price. Their recent report noted a slowing growth rate, but they have more demand that they can handle. That's why they're investing more in capex, $75 billion into AI and data centres.
Like Brookfield, and the alternative capital sector has been doing very well with firmer equity markets and more M&A. Last week's results were very decent, and they project earnings to grow around 25% this year and fee-related earnings to grow over 20% annually over 5 hears. Their PE is lower than peers, but are growing faster.
Will stick with it, still trading at a discount to peers, 10.5x PE vs. 11.9x PE. Investors are regaining some confidence recently with a new CEO, big board changes, including a compliance officer from JPM. Plus, it pays a 5% dividend yield. It has underperformed, but TD has more upside as it catches up.