Corporate earnings have remained resilient despite trade-war fears and market volatility, with technology companies continuing to post strong profits and reinvest heavily in artificial intelligence.
BNN Bloomberg spoke with Ryan Belanger, founder and managing principal at Claro Advisors, who said earnings strength, innovation leadership and historical patterns around interest rate cuts continue to support a favourable outlook for U.S. equities.
Key Takeaways
- Corporate earnings, particularly in technology, remain strong and are providing support for equity markets despite trade-war fears and market volatility.
- Heavy reinvestment in artificial intelligence is being funded by profits, but rising debt levels are increasing pressure for near-term returns.
- OpenAI represents a potential risk concentration due to large capital commitments relative to current revenue and its importance to broader AI supply chains.
- Non-recessionary rate cuts have historically been supportive for equities, though stubbornly high long-term yields remain a key risk.
- U.S. stocks are favoured over Canadian equities due to stronger innovation trends, even as select Canadian names continue to perform well.
Read the full transcript below:
ANDREW: Despite fears of a global trade war that pushed shares lower in April, corporate profits have held up fairly well. Let’s get more on earnings and the broader markets. We’re joined by Ryan Belanger, founder and managing principal at Claro Advisors. Ryan, good to see you. Starting with the U.S., what trends have emerged from third-quarter earnings?
RYAN: Most notably, earnings continue to be very strong. Large corporations — particularly in technology — are generating significant profits and reinvesting them into artificial intelligence. They’re doubling and even tripling down on what we’ve been calling the AI race, building out that ecosystem. Because profits remain strong, they’ve been able to continue making these investments, which are still bets to some degree. We have ideas about what they may produce, but there’s still uncertainty. That said, the strength in earnings has allowed them to keep pushing capital into the AI space.
ANDREW: Is there anything on the horizon that worries you — an iceberg, so to speak? A black swan is, by definition, unpredictable, but are there risks investors may be overlooking?
RYAN: One that stands out to me is OpenAI. It feels like the clear market leader in AI, and there have been a lot of future spending commitments tied to that business. Yet revenues are still only around US$20 billion. At the same time, there are massive capital commitments being made. That’s why we saw what felt like a bit of a code red recently, with concerns about competitive pressure from Google’s Gemini products. There’s some circularity there, and the ripple effects could be meaningful. Companies like Oracle, for example, are counting on OpenAI to deliver. If you’re looking for one thread that could unravel things, that might be it.
ANDREW: Because they’ve taken on a lot of debt relative to their revenue?
RYAN: Exactly. We’re starting to see more debt layered on after a period when these companies were funding investments almost entirely with cash. From a shareholder perspective, that’s a concern. Across big tech more broadly, net cash positions have declined quite a bit. These were once very cash-rich companies, and that’s less true today. The balance sheet quality has deteriorated somewhat, and that raises the bar for returns on these investments. Markets will want to see results sooner rather than simply trusting that payoffs will arrive years down the road.
ANDREW: What about interest rate cuts? History suggests non-recessionary cuts have been a good signal for markets.
RYAN: We think that’s generally true. According to our research, there have only been three soft landings since the Second World War, and this would potentially be a fourth. The concern, of course, is inflation. We don’t want a repeat of the 1970s, where inflation falls, rises again and forces further rate hikes. Avoiding that scenario is important for markets. Where rates are now is probably reasonable, but the key is the longer end of the yield curve. The 10-year yield isn’t dictated by policy decisions and has remained stubbornly around four per cent. If that were to soften, it would relieve pressure on interest-sensitive sectors like real estate. We’re also seeing more dissent within the Federal Reserve, which is unusual. There haven’t been three dissenters since 1994. Some policymakers believe rates should be cut more aggressively, and that’s something we’re watching closely.
ANDREW: Final question. If you had to choose between Canadian and U.S. stocks over the next year — and I know that’s an artificial comparison — where would you expect better returns?
RYAN: We would likely stay in the U.S. The pace of innovation there is superior to anywhere else. That doesn’t mean Canada lacks strong companies — we’ve seen TD shares perform very well recently — but if you forced me to choose where the next dollar should go, I’d lean toward the U.S.
ANDREW: Ryan, thanks very much.
RYAN: Thank you.
ANDREW: Ryan Belanger, founder and managing principal at Claro Advisors.
---
This BNN Bloomberg summary and transcript of the Dec. 12, 2025 interview with Ryan Belanger 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.
