Microsoft is committing more than $7.5 billion to expand Canadian artificial intelligence infrastructure over the next two years, with new data capacity expected online in late 2025. The investment comes as global governments push for AI sovereignty and look to secure domestic computing capabilities.
BNN Bloomberg spoke with Benjamin Klein, senior portfolio manager at Baskin Wealth Management, who discussed the implications for Canada’s economy, interest rates and the outlook for major U.S. technology names and Canadian banks.
Key Takeaways
- Microsoft’s $7.5-billion AI infrastructure plan is expected to enhance Canada’s data capacity and attract further investment from global tech firms.
- The Bank of Canada is expected to hold rates steady, though weaker economic conditions in 2026 could create downward pressure.
- Netflix remains the strongest media platform, with a potential Warner Brothers deal seen as a major opportunity despite regulatory hurdles.
- Adobe is viewed as significantly undervalued, with steady double-digit growth and little evidence so far of AI-related disruption.
- Royal Bank and National Bank are expected to remain resilient, supported by prime-focused lending and long-term integration benefits at National.
Read the full transcript below:
ANDREW: Microsoft says it’s investing more than $7.5 billion in Canadian AI infrastructure over the next two years. That new capacity is expected to come online in the second half of next year. Let’s get more from Benjamin Klein, senior portfolio manager at Baskin Wealth Management. Benjamin, thanks very much for joining us. Put this in context — does this look like a bold move by Microsoft?
BENJAMIN: We think it makes a lot of sense. We’ve been saying for a while that it makes a lot of sense for more AI investment and AI infrastructure to be built in Canada. We have the power generation and, of course, the preferable climate — keeps it nice and cold without having to pay anything. We think this is very reasonable by Microsoft. Hopefully there’s more where this came from and it can move the needle for the Canadian economy as well. We think this is a win-win for both sides.
ANDREW: It’s interesting. The Microsoft PR departments have been busy. They’re saying if you include investments since 2023, this will bring them up to $19 billion Canadian, or about US$14 billion. At the same time, they’re pledging almost $18 billion in India for AI cloud. So they’re trying to reassure governments around the world — hey, we’re going to be spending on AI within your borders.
BENJAMIN: Yep. If this is just the beginning — the tip of the iceberg, so to speak — there are plenty more billions where that came from. You might as well make as many governments happy as you can.
ANDREW: And we hear this talk of AI sovereignty. Countries don’t want to be left out, but we just don’t have the capital in this country to emulate what the U.S. is spending on data centres.
BENJAMIN: I think a lot of the investment is going to come from companies based in the States, like Microsoft and hopefully Amazon and other providers. This is a good start. Hopefully there’s more where it came from.
ANDREW: You’re in the camp that says the Bank of Canada stands pat tomorrow with no cut in interest rates.
BENJAMIN: That’s right. I don’t think we have a contrarian view. This seems to be very much the consensus expectation. The economic news has been better than most people anticipated. We’ve had a couple of quarters of strong job growth and a positive GDP surprise in Q3, which is very nice. I don’t think there’s a lot of downward pressure, at least for this rate announcement. But the expectation remains, at least for us, that there will be pressure on rates in 2026. Will they go down? How many cuts and how much? I don’t think anybody can really hazard a guess, but we expect no change tomorrow.
ANDREW: You like the look of Netflix. They may have a tough job buying Warner Brothers because of monopoly concerns in streaming, but generally you think it’s a great business to own?
BENJAMIN: Exactly. On the whole, we still think Netflix is the best-in-class media business. It has the strongest growth and the best profitability. It has a huge lead in technology and in scale. They have a creative management team always looking not just for new content but new content types, like video games. We think this could be a tremendous opportunity for Netflix. Yes, there are regulatory issues to worry about, but if it goes through, Netflix has all the tools to fix HBO Max’s problems. HBO Max has the best content — they’re the gold standard — but because of their lack of scale, they’ve found it difficult to make money. A lot of subscribers get it through distribution bundles, so Warner Brothers doesn’t collect the full subscription fee. We think Netflix can use its advantages in technology, scale and free cash flow to turn things around. They’ll almost certainly be required to keep the businesses separate, so your James Camerons and Christopher Nolans can keep their theatrical window. We think Netflix is almost certain to agree to any regulatory demands because it’s such a great opportunity.
ANDREW: Still, there have to be concerns about movie windows, because Netflix has such a strong incentive to get films on its platform and shorten theatre runs.
BENJAMIN: There will be a lot of details that need to be worked out. But if part of the issue is theatrical windows and the timing for streaming, we think Netflix will be very willing to make any concessions needed because it’s such a great opportunity.
ANDREW: Adobe is such a fascinating story. They’ve had a miserable year, but they have a lock on professional graphics and they’re big in video editing. Shares are down almost 40 per cent in the past 12 months. You think investors are missing value here?
BENJAMIN: Yes. It’s been a very rough ride for the stock. They’re reporting earnings this week. This isn’t a complicated thesis for us. We think the company is dramatically undervalued. It’s growing at double digits. It’s a capital-light, recurring revenue business with great margins, and it’s trading well below market multiples. You really can’t find opportunities to buy a company that consistently grows at double digits, has done so for years, and trades at a valuation as cheap as Adobe. The narrative is that AI image generation and other AI disruption could hurt the business. Management has been clear they haven’t seen any of this yet. Could that change? Of course. But we think it’s at least as likely Adobe adds AI to its own suite — Photoshop and Illustrator — as it is that they’re disrupted by an outside force. We think the company is dramatically undervalued. We believe market sentiment will turn as they continue to show strong earnings, and we see a lot of upside.
ANDREW: Benjamin, great to talk to you and thanks very much.
BENJAMIN: Thanks for having me.
ANDREW: Benjamin Klein, senior portfolio manager at Baskin Wealth Management.
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This BNN Bloomberg summary and transcript of the Dec. 9, 2025 interview with Benjamin Klein are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
