AI has driven tech stocks to new heights — but are we starting to see cracks in the story? In this timely episode, Amber Kanwar sits down with Shane Obata of Middlefield to find out whether the AI trade is running out of steam or just gearing up for its next phase. From Nvidia’s dominance to rising capital costs across the sector, Shane explains where investors should stay cautious and where the next wave of profits could come from — and why, in this market, all roads still lead to OpenAI.
Tech wreck: It’s shaping up to be another ugly day in the markets with futures sharply lower. Tech stocks are the main pain point taking all North American indices into the red for November. The NASDAQ fell for a third day in a row while AI darlings like Celestica (-12%) and Shopify (-6%) plunged on the TSX. Bitcoin is extending its bear market declines now down 24% from the peak in October and trading a six month low. Gold is no haven also down for a second day in a row. The culprit of the sell off appears to be the continued anxiety about the Federal Reserve not being able to cut rates in December because they won’t have the data that has been held back due to the US government shutdown. The odds of a December rate cut are no better than a coin toss compared to just two weeks ago when the market said there was a 70% chance. Against this backdrop, oil is higher on reports Ukraine has hit one of Russia’s biggest oil export hubs while Iran has seized an oil tanker in the Strait of Hormuz.
Under pressure: Applied Materials is plunging 7% after sales dropped in the quarter and it forecasted another sales decline. The semiconductor equipment maker said trade restrictions to China has weighed on sales. Profit actually beat expectations and so did forecast for next quarter but investors aren’t really in the mood today as evidenced by the futures this morning. “With the stock down 5% in the after-market, we maintain Buy,” wrote Citi’s Atif Malik. He notes this was a beat and raise quarter and said AI data centre demand will drive growth in the back half of 2026 once the China issues are worked through.
Bye bye: ECN Capital is getting taken out by Warburg Pincus in a $1.9 billion deal. The consumer finance and credit company agreed to the offer of $3.10/share which is a 13% premium to its recent close. Longer term shareholders are unlikely to be excited as the stock traded above the offer price at several points this year. “According to the presentation, the rationale for the take-private transaction is to provide a liquidity event for a small number of concentrated shareholders (10%+),” wrote Stephen Boland of Raymond James. The stock doesn’t trade much after it sold its Services business at the end of 2021. “We expect mixed reactions to the take-private price. Since the sale of Service Finance and the payment of the special dividend, the stock has struggled for a variety of reasons, including lingering COVID-related impacts on housing volumes, elevated interest rates, and operational challenges. In addition, the senior management team has undergone significant changes,” wrote Boland, “Lastly, we do not expect a superior proposal.”
Pipe dreams: Keyera could come under pressure after profit missed expectations and it cut spending plans for the year. The midstreamer which buys, sells, stores and transports natural gas and gas liquids had weakness its marketing operations. This is the unit that seeks to sell into the highest price market possible. This quarter the sales mix wasn’t great and the premiums they got were less than before. “While we expect that investors were primed for a challenging quarter, near-term headwinds are clearly greater-than-expected for Keyera‘s Marketing segment,” wrote TD’s Aaron MacNeil. Watch shares of South Bow at the open after the Keystone pipeline operator beat profit expectations but offered a 2026 outlook for profit that was below consensus.
Deep cut: I missed this one yesterday, Northland Power plunged 27% after slashing its dividend 40%. This caught the market off guard and a slew of banks downgraded the stock. The renewable power producer company had a very high payout ratio as it completes the construction of an offshore wind project. The street was given no warning about the dividend cut and in fact management communicated comfort with the high payout. While there were many downgrades yesterday, I was curious to read the rationale of those that didn’t downgrade. “Given yesterday’s steep sell-off, we are comfortable reiterating our Buy rating,” wrote TD’s Sean Steuart, “(Northland’s) valuation is inexpensive. After yesterday’s decline, NPI trades at 7.3x 2027E TEV/EBITDA versus an average 9.7x for its Canadian and international IPP peers. We understand investors’ concern around volatile policy, but core underlying asset value is compelling.”
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