This note from Bespoke Invest caught my attention: November 30th marked the 2-year anniversary of the release of ChatGPT, which kicked off the AI Boom. The success of ChatGPT has resulted in a massive ramp-up of capital expenditures in addition to various end-user adoptions like AI copilots, AI image generation, chatbots, humanoids, self-driving cars, and more. Leaving it to the imagination, there are endless applications for AI in modern life so the sky is the limit and it certainly will be looked back on as a notable technological advancement. With ChatGPT turning two, we've updated our chart comparing the Nasdaq's performance since its release to other major tech releases over the past few decades. These include the first Microsoft MS-DOS operating system in 1981, AOL in 1991, the Netscape web browser in 1994, the iPod in 2001, MySpace in 2003, and the iPhone in 2007. The Nasdaq is currently up 79% since ChatGPT's release on 11/30/22 (506 trading days ago). That barely edges out the Nasdaq's gain of 73% over the same 2-year time frame following the release of the Netscape web browser in December 1994. As you can see in the chart, these two releases -- ChatGPT and Netscape -- look very similar with bigger gains than any other major tech release since 1980. Below is a closer look at the Nasdaq's move since ChatGPT's release on 11/30/22 versus its performance following the release of the modern web browser (Netscape) in late 1994. In this chart we've expanded the timeline out to the end of 1999 so you can see just how much more the Nasdaq would go on to rally in the second half of the 1990s. For those arguing that we're still in the early innings of the AI Boom, this chart provides you with some strong ammo! Two years after the release of Netscape, the Dot Com Bubble of the 1990s was still just getting started.vThese type of strong two-year moves are certainly not without precedent, and it's noteworthy that the Internet boom of the 1990s was the only period that kept going much higher for many more years. We would note, though, that if the Netscape comp holds, there would be a pullback in the next 100 trading days or so before the next leg higher occurs.

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Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(new) Agnico Eagle Mines (AEM-T) is a gold mining company with operations in Canada, Australia, Finland, and Mexico. They focus on exploration, development, and production of precious metals, primarily gold. Headquarters are in Toronto, Canada. Gold miner's prices have not completely incorporated higher gold prices and the rapid acceleration in earnings that will occur because gold prices are much higher today than a year ago. Experience shows that the major factor in stock performance is the ability to control costs. Those companies that are more successful at this endeavour will be the winners. In the past month, Agnico Eagle Mines Limited has focused on workforce development, with significant efforts in training and skills development. The company has been actively training hundreds for careers in mining and has received funding to support its skills development program. Additionally, Agnico Eagle is bolstering its workforce by recruiting First Nations and foreign workers. New position in Core Portfolio.

(new) Celestica (CLS-T) In the past month, Celestica has been highlighted for its strong performance and growth potential, particularly driven by advancements in AI and hyperscale data centre solutions. The company reported a 22% revenue growth in Q3, surpassing earnings expectations, which led analysts to set a $70 price target for its stock. Recently, Barclays initiated an overweight rating on Celestica, citing its promising prospects in AI, further boosting investor confidence. New position in Core and ESG+ Portfolios.

(-) Dollarama (DOL-T) reported quarterly results that were generally in-line with consensus expectations. With valuation sitting well above long-term averages, shares sold off. That said, there were a couple of positive announcements. First, the company raised its 10-year store count goal by 10% to 2,200 and announced it will be building a second distribution centre in Western Canada (currently only one in Montreal). They are going to focus on increasing the store count in Western Canada, which is relatively under penetrated compared to Eastern Canada. We continue to believe DOL will be the destination of choice for Canadians that are looking to keep costs in check for at least the next couple of years. Owned in Core, ESG+ and Cash Flow Portfolios.

(new) Lululemon (LULU-US) Our timing on this was perfect as we added this before earnings. The athleisure retailer soared more than 18% after topping Wall Street’s estimates for the fiscal third quarter and issuing in-line guidance for the holiday season. Lululemon reported a record Black Friday with the highest ever visits to its shop app and e-commerce site, indicating strong consumer engagement. The company saw a 9% revenue growth in Q3, with significant increases in China Mainland and the rest of the world. Adjusted operating margin and EPS both saw increases, reflecting improved profitability. A $1 billion share repurchase authorization demonstrates confidence in the company's value. Lululemon is aggressively expanding internationally, with plans to open in Italy and under a franchise model in several other countries by 2025. New position in US Portfolio.

(new) Nu Bank (NU-US) Nu Holdings provides a digital banking platform in multiple countries, offering spending solutions like credit and prepaid cards, mobile payments, and an integrated shopping mall. They also provide savings, investing, borrowing, and protection solutions to individual and business customers. They are headquartered in São Paulo, Brazil. In the past month, Nu Holdings as been in the spotlight for several key developments. The company reported strong Q3 2024 financial results, surpassing earnings estimates and achieving a record return on equity. Additionally, there is significant interest in Nu Holdings' potential move of its legal domicile to the UK, as reported by multiple sources. Despite these positive developments, Citigroup recently downgraded Nu Holdings to a "Sell" rating, advising investors to take profits. I have wanted to own Nu Bank, and felt now was a great time to get a position on the Citi rating. New position in Opportunity Portfolio.

(new) Roku (ROKU-US) Shares jumped after Needham analyst Laura Martin said the streaming company will likely be bought for a “large premium” over the next year as Republicans take control of regulatory agencies. In the past month, Roku, has experienced significant investor interest and stock movement, primarily driven by acquisition speculation and strong earnings reports. The company's stock has seen a notable rise amid rumors of a potential acquisition by The Trade Desk, which has led to increased trading activity and optimism among investors. Additionally, Roku has expanded its content offerings by adding FreeCast to its subscription library, enhancing its streaming service with free channels and on-demand titles. New position in Opportunity Portfolio.

(+) Royal Bank (RY-T) is executing well across all fronts, including the HSBC integration. The EPS growth expectation of 7%+ in F2025 will likely place RY around the middle of the pack. RY is trading at 13.8x P/E (NTM consensus), a 15% premium to the group. While results continue to be solid, we assume the valuation premium will narrow over time. Royal Bank was the only bank this quarter that has not provided any negative surprises on credit performance. HSBC integration ahead of plan. The commentary suggests management is performing better than expected on other metrics such as client retention, which is a positive in the context of future revenue synergies to be extracted. Owned in Core, ESG+, and Cash Flow Portfolios.

Sol Strategies (HODL-T) is building the Microstrategy of Solana in public markets. Sol Strategies announced they have signed an LOI to purchase three more validators, which will increase the amount of SOL delegated to Sol Strategies-owned Solana validators to just under 1.5 million Solana (increase of 554,714 SOL). If this deal goes through, Sol Strategies will capture approximately $1.85 million in annual net income. Most private equity or public market investors have never heard of a validator. They couldn’t explain how these networks operate or why it is valuable to own the validators with staked SOL. But that is the opportunity — for a company like Sol Strategies to be the first mover and acquire as many validators as possible before other companies catch on to the strategy. A validator is a participant of a Proof-of-Stake (PoS) blockchain network. As part of the PoS consensus mechanism, validators are responsible for verifying new blocks and adding them to the chain to earn rewards. Most blockchains are designed to be decentralized. Owned in Opportunity Portfolio.

(new) Q2 Holdings (QTWO-US) provides cloud-based digital solutions for regional and community financial institutions in the US. Their offerings include a Digital Banking Platform, lending solutions like precisionlender, Q2 Cloud Lending, and innovative tools like Q2 Innovation Studio and Helix. Founded in 2004, the company is based in Austin, Texas. It is now powering digital banking for more than 50% of America’s top 100 banks. New position in Opportunity Portfolio.

(-) Uber (UBER-US) Alphabet’s self-driving car unit Waymo said it plans to launch its robotaxi service in Miami in 2026 through its Waymo One app. Testing with human drivers in its all-electric Jaguar vehicles is set to start next year. The planned expansion in Miami is the latest sign of momentum for Waymo, which for years had disappointed investors due to steep losses and an uncertain path to commercial success. After the company said it was expanding into Austin and Atlanta in partnership with ride-hailing giant Uber, Waymo started getting some love. In the months since, Waymo announced its largest expansion ever - making its robotaxi service in Los Angeles, a city of nearly 4 million people, open to the general public rather than waitlist-only. That made LA the third U.S. city where Waymo was generally available, joining San Francisco in June and Phoenix in 2020. On Alphabet’s earnings call on Oct. 29, CEO Sundar Pichai said Waymo was providing more than 150,000 paid rides a week. That’s up from 100,000 in August and 50,000 in May. Uber shares sold off with this latest competitive threat. Owned in Core, ESG+, US and Opportunity Portfolios.

Company of the Week: Celestica

CORPORATE PRESENTATION

 

Weekend Reading

RBC MacroMemo - December 3 – December 16, 2024 December webcast / Economic developments / Economic upside index / U.S. election update / Promising U.S. housing / Canadian corner RBC GAM

Global Insight 2025 Outlook What’s ahead for the new year? Explore RBC Wealth Management’s outlook for 2025 and four longer-term investment opportunities set to play out in the years ahead. There are a number of ways you can view, share and discuss our 2025 outlook. RBC INSIGHT

U.S. Markets Are Swallowing the Rest of the World The United States is the envy of the world in terms of financial markets and economic performance. BEN CARLSON

Outrageous Predictions 2025 Saxo Bank's predictions are not exactly news and not exactly real – at least not yet. And while they don’t know which stories will drive the global economy in the coming year, their 2025 predictions, from Nvidia trouncing its Mag 7 peers to the fall of OPEC, from a bold bet on reflation in China to a great leap forward in biotech, are just as promised. Outrageous. SAXO

Canada — the 51st State? Plus, Art Cashin, RIP GREG VALLIERE

A Plumber Tugged on a Mysterious Rope He Found in a Basement Attached to the rope was a real-life treasure chest full of gold worth an estimated $2.4 million. POPULAR MECHANICS

The Best Places to Go for Christmas These are 20 of the best places to spend Christmas this year. T+L

I Say Forbidden Things About Sports What's happening in athletics is tragic—but don't expect to hear about on ESPN. TED GIOIA

The slow, steady, frustrating, relentless, remarkable rise of Reddit: After nearly two decades, Reddit is breaking out into the mainstream. SHERWOOD

The 25 Most Influential Cookbooks From the Last 100 Years: Chefs, writers, editors and a bookseller gathered to debate — and decide — which titles have most changed the way we cook and eat. NEW YORK TIMES

Diversions

"September 5" Broadcast crew during 1972 Munich Olympics terrorist attack. IMBD

"Buy Now! The Shopping Conspiracy" Documentary on endless cycle of buying. NETFLIX

"The Order" Starring Jude Law. Based on a true story. IMBD

"Get Away" A killer Swedish vacation tale. IMBD