Sébastien (intro): Welcome to a special episode of the “In Your Interest!” podcast. My name is Sébastien Mc Mahon, and here today I offer you an extra from a conversation I had with Mark Gagnon in December 2024 when we were looking back on the year. And here we touched on a very interesting and specific topic: the impact of artificial intelligence and energy transition on the markets and on the economy. So here you go, some bonus material from our year-end conversation.
Sébastien: Maybe an extra topic, here: artificial intelligence, energy transition. You know, we've been discussing in this podcast throughout the year and even the last few years how, you know, it's an investment theme. But there are some real impacts on the economy with building all of those data centres, the electric grid. When we'll talk about the markets next week, I'm sure we'll talk about the utilities that have done well this year. So, the macro stuff is very telling: productivity boost and all of this, but you, as an investor, how has this theme progressed in 2024?
Marc: Yeah. You know, AI is still such an interesting and important topic of investment. It was the story of 2023. It's still part of the story in 2024. Of course, rate cuts were also part of this, as we said, the economy doing well… But AI is still a very strong engine of growth in the U.S., a very strong engine of innovation. And talking about innovation, we really feel that we're moving into a new phase of AI development. The first phase was, you know, “Let's train all those models to be more efficient, more precise, more predictable, and let's throw a lot of computing power, a lot of data at them. And let's train them to be better.” Now we're going to continue to train some of them, but we're going to try to use more specific models for specific tasks. So we will try to extend a bit, now, the usage of AI. And the big winner of that will be the cloud providers, for example, because most of those calculations will be done in the cloud. And in the meantime, as I said, we will see the impact more in everyday life, more in different corporations, but at the same time, they will make sure that those models will get better. They will probably evolve with what we call AGI, where a form of AI will do a specific task from A to Z. You know, for example, booking a flight, you're going to say, “Hey, I want to go to Vancouver. I want to leave late at night.” And then the AI finds the best deal at the time you want on the airline that suits your needs the best. And there it is! You have your ticket!
Sébastien: Yeah!
Marc: …And that's going to be fantastic. So those kinds of things, they're really coming and that's going to be quite powerful on the economy. You mentioned it: productivity. But it's going to need a lot of infrastructure, a lot of energy to build the ecosystem behind it. And there are several ways that we can play that as an investor in Canada. I'm thinking about all the things related to energy, natural gas, uranium. We have the renaissance of uranium going on. We have those new types of reactors, those small-scale reactors, modular reactors. We have copper that will be needed, investment building firms that will build all those infrastructures. That's exciting, actually, Sébastien!
Sébastien: Yeah, yeah, yeah. So training the brain, now, building the data centres and after that, reaping all of the rewards. This is the exciting stuff of the future.
Marc: Yeah. And the winners will continue to evolve. We have seen the chip manufacturers, the Nvidias of this world, being the winners. Maybe the next wave will be the software behind all those AI agents that will help us to perform different tasks. We've seen, in the last two months in the U.S. stock market, the software performing very, very well.
Sébastien: Yeah. So the future is exciting here.
Marc: Oh, yeah.
Sébastien: So that wraps up our bonus episode. I hope you found it insightful. If you have any comments or questions, you can always write or come back again next week.
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About
Sébastien has nearly 20 years of experience in the public and private sectors. In addition to his roles as Chief Strategist and Senior Economist, he is an iAGAM portfolio manager and a member of the firm’s Asset Allocation Committee. All of these roles allow him to put his passion for numbers, words, and communication to good use. Sébastien also acts as iA Financial Group’s spokesperson and guest speaker on economic and financial matters. Before joining iA in 2013, he held various economic roles at the Autorité des marchés financiers, Desjardins, and the Québec ministry of finance. He completed a master’s degree and doctoral studies in economics at Laval University and is a CFA charterholder.
Sébastien Mc Mahon and Marc Gagnon
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