Stocks climbed as artificial intelligence remained the driving force behind market momentum and capital spending trends. New AI deals and infrastructure investment continue to shape the equity landscape.
BNN Bloomberg spoke with Justin Elliott, portfolio manager at Caldwell Investment Management, who said investors remain cautious but unwilling to miss out on the AI-driven rally reshaping corporate and economic growth.
Key Takeaways
- Artificial intelligence remains the main driver of near- and medium-term equity performance.
- AI-related capital spending added roughly 1.1 per cent to U.S. GDP growth in the first half of the year.
- Market valuations remain high, with many stocks “priced for perfection.”
- Early enterprise AI adoption is boosting productivity and margins across sectors.
- Risks include a potential recession, regulatory hurdles and slower consumer demand.
Read the full transcript below:
MERELLA: Stocks were mostly higher today as the AI space continues to see more deals and capital spending. As artificial intelligence dominates the markets, my next guest says investors are nervous but reluctant to sit on the sidelines. Let’s bring in Justin Elliott, portfolio manager at Caldwell Investment Management. Justin, thanks for joining us. What are investors most nervous about when it comes to AI?
JUSTIN: Thanks for having me. I think it’s natural that the longer this trade goes on, the more investors start to worry about how sustainable it is. But we still like the outlook and believe AI will remain a significant driver of market performance in the near and medium term.
What’s interesting is that AI-related capital spending contributed about 1.1 per cent to U.S. GDP growth in the first half of the year, which is a meaningful impact on the broader economy. The recent wave of announcements from companies like OpenAI, Nvidia, Samsung and AMD really highlights how much investment and power capacity are needed to scale these systems globally.
We think this spending will remain durable, especially for the “picks-and-shovels” players with large order backlogs over the next couple of years. Earnings coming out over the next few weeks will be an important barometer of AI spending, usage trends and cloud growth. Overall, we think conditions have held up well, and the outlook remains strong.
MERELLA: How soon do investors want to see a return on that capital spending? And can companies afford to pause if the gains aren’t there?
JUSTIN: It’s a good question. For the hyperscalers, we’ve already seen accelerating growth in their cloud segments, which tend to be high-margin businesses. There’s a lot of upfront capital spending required, but over time, as these services scale, we expect high incremental margins and stronger returns.
On the enterprise side, adoption is still in the early stages. Many companies have focused on automating front-office functions like sales, but the real return on investment is coming from automating back-office processes — things that are done manually every day. That’s where we’re seeing productivity gains for companies using AI. We think it’s still early days, but as more enterprise data gets integrated into AI systems, returns should continue to increase over time.
MERELLA: Let’s talk about one of your stock picks, Meta — one of the biggest AI spenders. What do you like about it moving forward?
JUSTIN: Meta doesn’t have a public cloud business, but it’s been very successful at using AI to drive engagement on its platforms. Its improved recommendation systems and ad targeting have created a feedback loop — users spend more time on the platforms, ads become more relevant, and that boosts engagement even further.
We think ad dollars will continue consolidating among leaders like Meta and Google, which deliver the best returns on ad spend. Meta also has growth coming from other areas like WhatsApp’s business messaging, the rollout of Threads, and Meta AI. We think the company is positioned as a long-term market share gainer.
MERELLA: And your other pick is Intuit. How are they using AI?
JUSTIN: Intuit is integrating AI into its core QuickBooks platform to automate back-office accounting and bookkeeping tasks for small and medium-sized businesses. That can save companies up to about $500 a month in labour costs.
For Intuit, that means it can charge slightly more while delivering greater value, leading to higher average revenue per user. The company is also using AI in its TurboTax business to help customers with more complex filings — essentially making its accountants more productive and responsive. These integrations are helping drive stronger overall growth for Intuit.
MERELLA: All right, Justin, thanks for joining us. We’ll have to leave it there. Justin Elliott, portfolio manager at Caldwell Investment Management.
---
This BNN Bloomberg summary and transcript of the Oct. 6, 2025 interview with Justin Elliott 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.
