Good morning. I’m Joe Castaldo, a reporter on our business team with a focus on artificial intelligence. Two years after the launch of ChatGPT, has generative AI helped the business world? I’ll explore more on that, plus what is important to watch in the year ahead. But first:
In the news
Big U.S. banks have quit a Mark Carney-led global climate alliance ahead of Donald Trump’s return to the White House.
Canadian companies favoured debt deals to raise funds in 2024, with equity issuances near historic lows.
Indigenous communities focus on financial literacy education as more money flows from historic treaty settlements.
On our radar
- We’ve got our eyes peeled on Parliament Hill.
- In the United States, key manufacturing data for December will provide a snapshot of the industrial sector’s sentiment.
- In Germany, today’s jobs report isn’t likely to bring much optimism to employers about the rest of 2025.
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In focus
How has generative AI helped businesses?
There are at least two vocal camps when it comes to generative AI. There are proponents who say it’s going to change everything, create billions and billions of dollars in economic value and rescue Canada from its productivity crisis. An equally dogmatic group insists generative AI is too flawed, unreliable and financially unsustainable to amount to much.
My feature out today shows that the AI doubters are perhaps a little blinkered.
Businesses are using generative AI in all kinds of ways – to write computer code, resolve customer complaints, help employees find information faster, produce legal contracts, compile research reports and help sales reps prepare for client meetings, allowing those reps squeeze in one or two more sessions each day.
Score one for the AI optimists, right?
Well, maybe not. A lot of these examples are low-hanging fruit, and the results are not necessarily showing up on the bottom line. Some companies are blanching at the costs of generative AI while not seeing much benefit. Reliability issues limit how it can be used and the tasks that can be automated. Plus, new research shows that Canadian companies that have adopted AI in recent years are not that much more productive, raising questions about how the technology is going to fix the country’s dismal productivity record.
The new year is looking like crunch time for generative AI. Tech giants such as Microsoft Corp., Meta Platforms Inc. and Google have spent billions to build out data centres to power AI, while the federal Liberal government is rolling out $2-billion to help companies construct and access this infrastructure. The feds are also prepared to put up another $15-billion to entice pension funds.
Now it’s up to developers to make products and services with generative AI that are useful and cost-effective. Google chief executive officer Sundai Pichai said as much recently. “In 2025, we need to be relentlessly focused on unlocking the benefits of this technology and solve real user problems,” he told employees last month.
There are definitely challenges ahead: Those data centres eat up a lot of electricity and water; the data used to train AI models could be growing scarce; and the costs of building the biggest, most powerful AI models are rising.
But innovation never sleeps. Some companies are working on making data centres more efficient and thus cheaper and less taxing on the environment. Synthetic data, meaning data that is generated by AI models, can help fill the gaps now that AI models have already consumed the entire internet.
Even with all these developments, some proponents of generative AI still seem unsure about its ultimate purpose. David Cahn is a partner at Sequoia Capital, which has invested in a number of AI startups. In December, he wrote that many people have compared today’s generative AI rush to the railroad oligopolies of the Gilded Age. In this analogy, AI data centres represent the rails. “The question remains what freight will ride on those rails, and how we can leverage this new technology to create value for customers and end users?” he wrote.
Unfortunately, I can’t tell you who is correct in the battle of the AI optimists and the pessimists, at least not right now. But I’ll keep score as best I can this year.
On my radar for 2025
- Get ready for agents: AI tech giants such as Google and Anthropic are betting big on agents. So are enterprise software companies such as Salesforce Inc. Agents are AI-powered bots that go beyond answering questions to carry out tasks by working with other software applications or browsing websites. It’s one big step toward making the technology more useful – provided agents work properly.
- Regulation – or not: The past two years saw a flurry of discussion and concern about how to control AI technologies, which carry all kinds of risks. The European Union managed to pass a bill, the Biden administration in the U.S. passed an executive order and Canada made progress on Bill C-27, which contains the Artificial Intelligence and Data Act. But progress has stalled. The incoming Trump administration has vowed to scrap the Biden executive order, saying it “hinders AI innovation and imposes Radical Leftwing ideas.” In Canada, Bill C-27 is not only hamstrung in Parliament, but a federal election is looming. Except to see lots of talk about regulation, but perhaps not much action.
- What is Ilya building? OpenAI co-founder and former University of Toronto student Ilya Sutskever started a new company in 2024, Safe Superintelligence Inc. Sutskever has been hugely influential in the development of generative AI and is seen by some as a guru. He’s already raised US$1-billion for his new company with the goal of building systems that can surpass human intelligence. Don’t expect him to get there this year, but he might drop some breadcrumbs.
P.S. Have you met fake Joe? No? I created an AI avatar of myself to go to Zoom meetings, check him out.
Charted
How to keep entrepreneurs and their capital in Canada
» Opinion: There’s plenty of anecdotal evidence that shows Canadian entrepreneurs leaving the country or selling their companies too soon. Comparing venture capital (VC) exit data in Canada and the U.S. can help a bit more. In 2023, more than 5.7 per cent of U.S. exits involved IPOs with an average valuation of more than $1-billion, while Canada had only one IPO (2.7 per cent of exits), valued at $337-million. In terms of acquisitions, the average value of a U.S. VC-backed exit in 2023 was approximately $300-million, compared with just $12-million in Canada, excluding three major outliers. Canada must create an environment in which entrepreneurship is celebrated, not penalized.
Bookmarked
On our reading list
Sweet tooth: Rogers Sugar Inc. spends big on Montreal expansion to meet insatiable demand from food makers.
Big guide to travel cards: welcome bonuses will always be a consideration, there are certain things to look out for.
Angels’ Den: With inspiration from CBC’s Dragons’ Den, St. Michael’s Hospital in Toronto has a fundraiser taking ideas of how to better deliver health services into promising Canadian medical businesses. Startup money has to led to nine companies so far.
Teachers’ Den: Ontario Teachers’ Pension Plan doubles down with more money focused on venture investments in leading-edge technology after tech bubble stumbles.
Tony Keller writes about the MAGA fight over the future of American immigration, and the Canadian connection.
Morning update
Global markets were mixed as investors searched for direction at the end of a holiday-shortened trading week. Wall Street futures were in modestly positive territory while TSX futures followed sentiment higher.
Overseas, the pan-European STOXX 600 was down 0.21 per cent in morning trading. Britain’s FTSE 100 slipped 0.05 per cent, Germany’s DAX declined 0.33 per cent and France’s CAC 40 fell 0.73 per cent.
In Asia, Japan’s Nikkei remained on a holiday break, while Hong Kong’s Hang Seng closed 0.7 per cent higher.
The Canadian dollar traded at 69.47 U.S. cents.