Aug 2026 - Canada's Emerging Global Leader in Autonomous sub sea systems- Kraken Robotics

 

Kraken Robotics (TSX-V: PNG)

Business & Investment Report

Canada's Emerging Global Leader in Autonomous Underwater Intelligence

Updated –  August 2026

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Executive Summary

 

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Over the past two years, Kraken Robotics has transformed itself from a specialized sonar manufacturer into one of the world's most comprehensive providers of subsea intelligence technologies. Through organic innovation and strategic acquisitions—including 3D at Depth and the transformational acquisition of the Covelya Group—Kraken now offers an integrated portfolio spanning sonar, navigation, underwater communications, LiDAR, subsea batteries, imaging, positioning, robotics, and data analytics.

Today, Kraken is increasingly becoming what companies such as Palantir are to battlefield data above the surface—except below the ocean.

As NATO governments dramatically increase defence spending while simultaneously racing to protect critical undersea infrastructure, Kraken finds itself positioned in one of the fastest-growing defence sectors anywhere in the world.

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Investment Thesis

Kraken's business rests upon five powerful global trends:

• NATO's largest military expansion since the Cold War
• Rapid adoption of autonomous naval systems
• Protection of underwater pipelines and communications cables
• Expansion of offshore energy and offshore wind
• Growing geopolitical importance of the Arctic and Indo-Pacific

Unlike many emerging defence companies, Kraken is already:

• Profitable
• Cash-flow positive
• Winning repeat orders
• Expanding internationally
• Manufacturing critical technologies itself

This combination significantly reduces execution risk compared with earlier-stage defence technology companies.

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The Covelya Acquisition Changed Everything

 

8

Kraken's C$615 million acquisition of Covelya Group fundamentally altered the scale and scope of the company. Covelya brings together several respected subsea technology businesses, including Sonardyne, EIVA, Voyis Imaging, Wavefront Systems, Chelsea Technologies, and Forcys. Management expects the combined company to generate roughly C$365 million in annualized revenue with EBITDA margins around 24%.

Strategic Benefits

Instead of supplying a single sonar system, Kraken can now offer complete mission solutions that include:

• Navigation
• Acoustic positioning
• Underwater communications
• High-resolution sonar
• LiDAR
• Batteries
• Mission planning software
• Inspection and monitoring systems

This makes Kraken a much more attractive supplier to major naval integrators and offshore energy customers.

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Kraken's Product Portfolio

1. KATFISH™ High-Speed Synthetic Aperture Sonar

Purpose

High-speed mine hunting and seabed mapping.

Applications

• Naval mine countermeasures
• Harbour security
• Seabed mapping
• Pipeline inspections
• Cable route surveys

KATFISH can operate at speeds of up to approximately 10 knots while producing extremely high-resolution imagery over large survey areas, enabling faster mine detection and seabed characterization than many conventional side-scan sonar systems.

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2. Kraken SAS

 

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This is Kraken's flagship imaging technology.

Unlike conventional sonar, Synthetic Aperture Sonar provides:

• Photographic-quality seabed imagery
• Simultaneous bathymetric mapping
• Exceptional object classification
• AI-assisted target recognition

It is increasingly becoming one of NATO's preferred technologies for autonomous mine hunting.

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3. SeaPower™ Pressure-Tolerant Batteries

 

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One of Kraken's fastest-growing businesses.

Applications include:

• Autonomous Underwater Vehicles
• Mine hunters
• Long-duration seabed sensors
• Offshore energy systems
• Defence robotics

Pressure-tolerant batteries eliminate the need for heavy pressure vessels, increasing endurance and reducing size and weight for subsea platforms. SeaPower has become a major growth driver, with substantial defence orders announced through 2026.

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Halifax Battery Manufacturing

 

4

Kraken is expanding subsea battery production in Halifax, Nova Scotia, to meet rising defence demand. The new facility is strategically located near Canada's largest naval base and the Royal Canadian Navy's Atlantic Fleet. The expansion supports growing demand for SeaPower batteries used in uncrewed underwater vehicles and other subsea defence systems.

This provides advantages in:

• Domestic supply-chain resilience
• Collaboration with Canadian defence programs
• Faster support for NATO customers operating in the North Atlantic

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4. Underwater LiDAR

 

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Following the acquisition of 3D at Depth, Kraken added industry-leading underwater laser imaging.

Applications include:

• Offshore wind farms
• Oil platforms
• Marine construction
• Naval infrastructure
• High-precision metrology

LiDAR complements sonar by providing highly accurate 3D measurements in suitable water conditions.

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5. Sub-Bottom Imaging

 

Kraken's Sub-Bottom Imager allows operators to see beneath the seabed.

Uses include:

• Pipeline routing
• Cable installation
• Offshore wind foundations
• Geological surveys
• Hazard identification

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6. Acoustic Corer

Instead of drilling numerous physical cores, this technology creates a 3D acoustic representation of subsurface sediments, reducing cost and accelerating offshore site investigations.

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NATO Validation

One of Kraken's most important achievements is not simply winning contracts—but seeing its technology used operationally.

Recent demonstrations have integrated KATFISH with autonomous launch-and-recovery systems and unmanned surface vessels, supporting the future of robotic mine countermeasures.

Operational use by allied navies, including activity associated with mine-countermeasure missions in strategically sensitive regions such as the Strait of Hormuz, provides valuable real-world validation. While governments often do not disclose every subsystem employed during active operations, the broader trend toward autonomous mine hunting aligns directly with Kraken's strengths.

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Protecting the World's Underwater Infrastructure

Modern economies depend on:

• Internet fibre-optic cables
• Oil pipelines
• Gas pipelines
• Electrical interconnectors

Following the sabotage of the Nord Stream pipelines and repeated incidents involving subsea cables, governments have sharply increased spending on underwater surveillance and inspection.

Kraken's technologies are well suited to:

• Detecting seabed disturbances
• Inspecting pipelines
• Monitoring offshore energy infrastructure
• Surveying cable routes
• Supporting Arctic operations

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Financial Outlook

The enlarged Kraken expects approximately C$290–320 million of revenue in 2026 following the closing of the Covelya acquisition, with strong margins and a significantly expanded addressable market. Product orders announced by Kraken and Covelya have continued to grow throughout 2026, reflecting sustained demand for subsea batteries, sonar, navigation, and positioning systems.

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Competitive Position

Kraken has very few Canadian competitors.

Its principal competitors are international leaders:

• Kongsberg (Norway)
• Exail (France)
• Teledyne Marine (United States)
• Thales (France)

Within Canada:

• Cellula Robotics specializes in autonomous underwater vehicles.
• Ultra Maritime Canada focuses on naval sonar and anti-submarine warfare.
• General Dynamics Mission Systems–Canada is a naval systems integrator.
• MDA Space leads in space robotics rather than subsea systems.

Kraken's advantage is the breadth of its integrated subsea technology portfolio, which now spans sensors, power, communications, navigation, and analytics.

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Risks

Investors should monitor:

• Integration of the Covelya businesses.
• Execution while scaling globally.
• Defence procurement timing.
• Capital allocation after major acquisitions.
• Competition from larger multinational defence firms.

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Five-Year Outlook

If current geopolitical and defence trends continue, Kraken has a realistic opportunity to become one of the Western world's premier suppliers of autonomous subsea technologies.

Potential long-term growth drivers include:

• Continued NATO naval modernization.
• Royal Canadian Navy autonomous mine-countermeasure programs.
• Protection of critical subsea infrastructure.
• Offshore wind and energy inspection.
• Arctic surveillance.
• Expansion of autonomous underwater vehicles requiring advanced power, navigation, and sensing systems.

Conclusion

Kraken Robotics today is fundamentally different from the company it was just two years ago. It has evolved into a vertically integrated provider of underwater intelligence systems with a portfolio spanning high-resolution sonar, pressure-tolerant batteries, LiDAR, navigation, communications, and mission software. In my view, its combination of proven technology, exposure to long-duration defence and infrastructure spending, and growing international customer base makes it one of the most compelling publicly traded Canadian defence technology companies for investors with a multi-year investment horizon. The primary challenge ahead is execution—but if management integrates its acquisitions successfully, Kraken has the potential to become a globally recognized leader in autonomous subsea systems.

A powerful setup for exponential growth from combining two of Canada's smallcap stocks (PNG and FLT)

     

                  

Will IONQ become the company that built the quantum network—the backbone of the future quantum economy? Stay tuned!

 IONQ (NYSE: IONQ)

The Investment Case for Buying IonQ at Today's Price

Why I Believe the Recent Pullback Has Created One of the Most Attractive Long-Term Opportunities in Quantum Computing

July 2026

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Executive Summary

Artificial Intelligence has ignited the largest technology investment cycle since the birth of the Internet. Yet quietly emerging behind AI is another technological revolution that many believe could ultimately rival its economic impact: quantum computing.

Among the publicly traded companies leading this revolution, IonQ stands apart—not simply because of its technology, but because of its vision.

While many competitors remain focused on building ever-larger quantum computers, IonQ appears to be pursuing a far more ambitious objective:

To build the infrastructure of the future quantum economy.

That infrastructure includes:

• Quantum computers
• Quantum networking
• Quantum cloud computing
• Quantum cybersecurity
• Quantum communications
• Quantum sensing
• Semiconductor manufacturing
• Quantum software

Supported by approximately $3 billion in cash, rapidly accelerating commercial revenues, world-class strategic acquisitions, and growing relationships with governments and hyperscale cloud providers, IonQ has evolved from a promising research company into what may become one of the foundational technology companies of the next several decades.

Although the stock still commands a premium valuation relative to today's revenue, the recent pullback has materially improved the investment opportunity, particularly for investors with a medium term investment horizon.

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Investment Thesis

IonQ is no longer simply attempting to build a better quantum computer.

It is aiming to build the entire ecosystem that will connect quantum computers together and make them commercially useful.

If management succeeds, IonQ could become to quantum computing what Nvidia became to artificial intelligence:

The infrastructure company that enables an entirely new industry.

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The Quantum Industry Is Changing

For years, investors judged quantum companies almost exclusively by one number:

How many physical qubits does the computer contain?

That metric is becoming increasingly less important.

Commercial customers care far more about:

• logical qubits
• reliability
• error correction
• scalability
• networking
• cloud accessibility
• security

The industry is gradually shifting away from building larger standalone machines toward building scalable quantum systems.

IonQ appears to have recognized this shift earlier than most competitors.

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IonQ's Most Important Strategic Advantage

Perhaps the single most significant aspect of IonQ's strategy is one that many investors still overlook.

IonQ increasingly appears to envision many smaller fault-tolerant quantum processors linked together by quantum networks. That distinction is becoming central to its strategy.

This represents a fundamental departure from the industry's traditional approach.

Rather than attempting to place millions of physical qubits inside one enormous quantum computer, IonQ appears to envision a future much closer to today's cloud computing model.

Thousands of smaller quantum processors could be connected through ultra-secure quantum networks, allowing them to function collectively as one scalable computing platform.

This architecture offers several potential advantages:

• easier manufacturing
• improved reliability
• incremental scalability
• simpler maintenance
• lower engineering complexity
• geographic distribution
• enhanced security

In many respects, IonQ appears to be building the quantum equivalent of Amazon Web Services rather than the quantum equivalent of a traditional supercomputer.

If this vision proves correct, the company's addressable market becomes dramatically larger than simply selling quantum computers.

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Building the Quantum Internet

IonQ's acquisition strategy reveals management's long-term vision.

Each acquisition fills an important piece of a much larger puzzle.

Oxford Ionics

Adds advanced trapped-ion computing technology.

Accelerates the path toward fault-tolerant quantum computing.

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ID Quantique

One of the world's leaders in:

• quantum networking
• quantum key distribution
• quantum-safe encryption
• secure communications

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Lightsynq

Provides quantum repeater technology.

Quantum repeaters are essential for connecting quantum computers over long distances, making them one of the key enabling technologies for the future quantum internet.

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SkyWater Technology

Expands IonQ's semiconductor manufacturing capabilities.

Supports scalable production of increasingly sophisticated trapped-ion chips.

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Viewed individually, these acquisitions appear impressive.

Viewed collectively, they reveal something much larger:

IonQ is assembling nearly every major component required for a global quantum infrastructure platform.

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Technology Leadership

IonQ remains one of the world's leaders in trapped-ion quantum computing.

Its technology offers important advantages including:

• extremely high gate fidelity
• long coherence times
• all-to-all qubit connectivity
• lower error rates
• easier implementation of logical qubits

These characteristics are considered among the strongest foundations for eventually achieving fault-tolerant quantum computing.

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Financial Strength

Financially, IonQ has become one of the strongest companies in the quantum industry.

Highlights include:

• approximately $3 billion in cash and investments
• one of the strongest balance sheets in quantum computing
• years of operating runway
• substantial acquisition capacity
• ability to continue investing aggressively without near-term financing pressure

Many competitors will need additional capital long before IonQ does.

That financial advantage may become increasingly important as the industry matures.

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Commercial Growth

IonQ is no longer simply a research company.

Commercial adoption is accelerating.

The company continues expanding relationships through:

• Microsoft Azure Quantum
• Amazon Braket
• Google Cloud

Additional customers include:

• defense organizations
• intelligence agencies
• government laboratories
• universities
• Fortune 500 corporations

Commercial revenue continues growing rapidly while the customer base expands.

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Government Relationships

Quantum technology is becoming a strategic national priority.

Governments increasingly recognize its importance in:

• national defense
• intelligence
• cybersecurity
• secure communications
• advanced research

IonQ has established relationships across many of these areas, positioning the company to benefit from increasing government investment in quantum technologies.

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Beyond Quantum Computing

Many investors still think IonQ builds quantum computers.

That description is becoming increasingly incomplete.

Today IONQ is building businesses in:

• quantum computing
• quantum networking
• quantum communications
• quantum cloud services
• quantum cybersecurity
• quantum sensing
• semiconductor manufacturing
• quantum software

This diversification substantially increases the company's long-term opportunities.

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Why IonQ Resembles Nvidia More Than a Traditional Hardware Company

The comparison to Nvidia is not based on current size or profitability.

It is based on strategic positioning.

Nvidia became indispensable because it built an ecosystem.

Its success was never simply about selling GPUs.

It built:

• processors
• networking
• software
• developer tools
• cloud infrastructure

IonQ appears to be following a remarkably similar path within quantum technology.

Instead of merely selling quantum computers, 

IONQ is building the infrastructure layer upon which future quantum applications will operate.

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Valuation

One criticism frequently directed toward IonQ is that the company trades at a premium valuation.

From a traditional perspective, that observation is correct.

IonQ is not yet consistently profitable and still trades at valuation multiples well above mature technology companies.

However, that criticism deserves important context.

Over the past several months:

• the company's business has become stronger,
• revenue guidance has increased,
• strategic acquisitions have expanded its capabilities,
• the balance sheet has remained exceptionally strong,
• and the long-term opportunity has arguably become even larger.

Meanwhile, the share price has experienced a significant pullback from its highs.

As a result, while IonQ still commands a premium valuation, that premium appears considerably more justified today than it did several months ago.

Rather than viewing today's valuation as excessive, I believe investors should view it as a premium-quality company selling at a premium—but increasingly reasonable—price.

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Risks

Like all emerging technology investments, IonQ carries meaningful risks.

These include:

• technology execution
• competitive pressure
• slower commercial adoption
• regulatory uncertainty
• valuation volatility
• continued operating losses during expansion

Investors should expect significant share-price volatility over the coming years.

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Investment Conclusion

IonQ possesses an unusually attractive combination of strengths:

✔ Industry-leading trapped-ion technology

✔ Approximately $3 billion in cash

✔ Rapid commercial growth

✔ World-class strategic acquisitions

✔ Strong government relationships

✔ Expanding cloud partnerships

✔ Leadership in quantum networking

✔ Vision extending well beyond quantum hardware

Most importantly, IonQ appears to understand something that many investors—and perhaps some competitors—have yet to fully appreciate:

The future of quantum computing may not belong to one gigantic quantum computer. It may belong to millions of logical qubits distributed across many interconnected fault-tolerant quantum processors linked by quantum networks.

That architectural shift has profound implications.

If correct, the winners will not necessarily be those that build the largest standalone quantum computer.

Instead, the winners may be those that build the infrastructure connecting them all.

IonQ appears to be positioning itself precisely for that future.

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Final Assessment

At today's post-pullback valuation, I believe IonQ offers one of the most compelling long-term investment opportunities available in the public markets.

While the stock remains expensive by conventional metrics, its valuation should be viewed in the context of:

• one of the industry's strongest balance sheets,
• rapidly accelerating commercial adoption,
• an expanding ecosystem of strategic acquisitions,
• leadership in trapped-ion technology,
• growing government support,
• and perhaps most importantly, a vision that extends beyond quantum computers to the creation of a distributed quantum computing and networking infrastructure.

For investors with a 5- to 10-year investment horizon, I believe the recent decline has shifted IonQ from being an outstanding company at an overly optimistic price to an outstanding company at a price that offers a far more attractive balance between risk and long-term potential.

If management successfully executes its strategy, IonQ may ultimately be remembered not simply as one of the companies that built quantum computers, but as the company that built the network connecting them—the backbone of the future quantum economy.

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Overall Investment Rating (July 2026)

Category	Rating
Technology Leadership	⭐⭐⭐⭐⭐
Financial Strength	⭐⭐⭐⭐⭐
Management Vision	⭐⭐⭐⭐⭐
Competitive Position	⭐⭐⭐⭐⭐
Commercial Momentum	⭐⭐⭐⭐⭐
Government & Defense Opportunity	⭐⭐⭐⭐⭐
Risk	⭐⭐⭐☆☆
Valuation	⭐⭐⭐⭐☆
Long-Term Investment Potential (5–10 Years)	⭐⭐⭐⭐⭐

Bottom Line: IonQ remains a speculative investment because the quantum industry itself is still emerging. However, among publicly traded quantum companies, it combines technological leadership, financial strength, ecosystem strategy, and long-term vision in a way that is difficult to match. For patient investors who can tolerate volatility, the current pullback offers a more attractive entry point than was available when the shares were trading near their highs.

Ed Note:  We are long IONQ stock and have added in July during this pullback!

Physical Ai is the next wave. Five investments we own or are buying this summer.

 

The Next Industrial Revolution - Physical Ai!

A Five-Position Portfolio Designed for Long-Term Growth

Executive Summary

Artificial Intelligence is entering a new phase.

The first wave of AI focused on software—large language models, chatbots, and cloud computing. The second wave centered on building the infrastructure that powers AI, benefiting companies such as NVIDIA, Broadcom, Micron, and TSMC.

Today, a third wave is emerging: Physical AI.

Physical AI refers to intelligent machines that perceive, think, and act in the real world. It includes industrial robots, autonomous drones, self-operating vehicles, robotic warehouses, underwater autonomous systems, and AI-powered factories.

Jensen Huang, CEO of NVIDIA, has repeatedly identified Physical AI as one of the next major growth markets in technology. As labour shortages, geopolitical tensions, industrial reshoring, and automation accelerate worldwide, demand for intelligent machines is expected to expand dramatically over the coming decade.

For Canadian retail investors, the challenge is deciding how to invest in this trend without becoming overly concentrated in a handful of expensive technology stocks.

This report presents a diversified five-position portfolio designed specifically for a Canadian investor seeking long-term capital appreciation while maintaining exposure to multiple segments of the Physical AI ecosystem.

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Why Physical AI Matters

Unlike traditional software AI, Physical AI requires an entire ecosystem working together.

Every autonomous machine requires:

• Artificial intelligence processors
• Advanced robotics
• Secure communications
• Industrial networking
• Sensors
• Navigation systems
• Software
• Mission-critical infrastructure

Rather than betting on one robot manufacturer or one AI company, investors can build exposure across the technologies that enable the entire industry.

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The Portfolio

Investment	Suggested Weight	Role
Qualcomm (NASDAQ/TSX: QCOM)	30%	AI processing and Edge AI
Kraken Robotics (TSX: PNG)	25%	Autonomous marine systems
Global X Robotics & Artificial Intelligence Index ETF (TSX: RBOT)	20%	Diversified global robotics
Volatus Aerospace (TSX: FLT)	15%	Autonomous aerial systems
Nokia (NYSE: NOK)	10%	Industrial communications and networking

This portfolio provides exposure to five complementary components of the Physical AI revolution.

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Qualcomm – The Brain (30%)

Every intelligent machine requires computing power.

Qualcomm has evolved far beyond smartphone processors and is becoming one of the world's leaders in Edge AI—artificial intelligence that operates directly inside machines rather than relying on cloud-based data centres.

Its technologies increasingly power:

• Autonomous vehicles
• Industrial robots
• Smart factories
• AI-enabled PCs
• IoT devices
• Commercial drones
• Advanced automation systems

Edge AI reduces latency, improves security, lowers energy consumption, and enables machines to make decisions in real time.

Why Canadian investors should like it

Qualcomm combines strong cash flow, consistent profitability, a solid dividend, and exposure to multiple AI growth markets. It provides a stable foundation while still participating in one of the fastest-growing technology trends.

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Kraken Robotics – The Oceans (25%)

Canada has quietly produced one of the world's most innovative marine technology companies.

Kraken Robotics develops advanced:

• Autonomous underwater vehicles
• Synthetic aperture sonar
• Underwater imaging
• Naval intelligence systems
• Offshore inspection technologies

Its recent acquisition of Sonardyne significantly expanded its global footprint, technology portfolio, and customer relationships.

As NATO nations modernize their naval capabilities and offshore energy infrastructure expands, demand for autonomous underwater systems is expected to increase.

Why Canadian investors should like it

Kraken represents a uniquely Canadian opportunity to participate in a global defence and marine robotics market with long-term structural tailwinds.

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RBOT ETF – The Body (20%)

The RBOT ETF provides diversified exposure to many of the world's leading automation companies.

The ETF includes businesses involved in:

• Industrial robotics
• Warehouse automation
• Factory automation
• Medical robotics
• Motion control
• Machine vision

For Canadian investors, RBOT offers two important advantages:

• It trades on the TSX in Canadian dollars.
• It provides broad diversification across the robotics industry.

Instead of trying to predict which robot manufacturer will ultimately dominate, investors gain exposure to the entire sector.

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Volatus Aerospace – The Sky (15%)

Canada is becoming an increasingly important player in autonomous aviation.

Volatus Aerospace develops and operates advanced drone technologies serving both commercial and government markets.

Its opportunities include:

• Defence and military surveillance
• Border security
• Infrastructure inspection
• Utility monitoring
• Emergency response
• Cargo delivery
• Arctic operations

The company's expanding manufacturing capabilities and relationships with government agencies position it to benefit from increasing investment in autonomous aerial systems.

Why Canadian investors should like it

Volatus offers exposure to one of the highest-growth segments of Physical AI while remaining a Canadian-listed company with significant long-term upside potential.

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Nokia – The Nervous System (10%)

Autonomous machines cannot function without reliable communications.

Nokia has transformed itself into an industrial networking company focused on:

• Private 5G networks
• Enterprise wireless
• Edge networking
• Industrial automation
• Quantum-safe cybersecurity
• Future 6G technologies

Factories, ports, airports, mines, and utilities increasingly require secure, ultra-low-latency communications to support fleets of autonomous machines.

Why Canadian investors should like it

Nokia provides exposure to a critical enabling technology that is often overlooked by investors focused solely on robotics or semiconductors.

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Why These Five Work Together

Many technology portfolios suffer from significant overlap.

This portfolio intentionally avoids that problem.

Each investment occupies a unique position within the Physical AI ecosystem.

Function	Investment
Intelligence	Qualcomm
Robotics	RBOT
Marine Autonomy	Kraken Robotics
Aerial Autonomy	Volatus Aerospace
Communications	Nokia

Rather than owning five companies competing against each other, investors own five companies enabling one another.

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Why This Portfolio Is Well Suited to Canadian Retail Investors

Canadian investors often face unique challenges:

• Limited access to many emerging technology companies.
• Currency conversion costs when investing in U.S. markets.
• The need to balance growth with diversification.
• Tax efficiency within registered accounts such as TFSAs and RRSPs.

This portfolio addresses those issues by combining:

• Two Canadian-listed growth companies.
• One Canadian-listed ETF.
• Two established global technology leaders.

It provides exposure to both Canadian innovation and international market leadership while remaining simple enough for most self-directed investors to manage.

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Potential Growth Catalysts (2026–2030)

Several long-term trends could support this portfolio over the next five years:

• Widespread adoption of AI-powered industrial robots.
• Expansion of autonomous drones in commercial and defence applications.
• Increased NATO defence spending.
• Growth in autonomous underwater surveillance.
• Accelerating adoption of private 5G networks.
• Expansion of Edge AI into manufacturing, healthcare, logistics, and transportation.
• Labour shortages driving automation investment.
• Industrial reshoring across North America and Europe.

These trends are complementary rather than independent, creating multiple avenues for growth.

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Principal Risks

No investment strategy is without risk.

Investors should consider:

• Market volatility affecting technology stocks.
• Slower-than-expected adoption of robotics.
• Execution risk for smaller companies such as Kraken Robotics and Volatus Aerospace.
• Government procurement delays in defence markets.
• Currency fluctuations for Canadian investors holding U.S.-listed securities.

Diversification across five complementary businesses helps reduce dependence on any one company or technology.

Ed Note: We now own two of these stocks and will be adding the ETF and others over the summer!

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Final Thoughts

Many investors view Artificial Intelligence solely through the lens of software.

History suggests that the companies enabling technological revolutions often become just as valuable as those creating the applications.

Physical AI represents the convergence of robotics, autonomous systems, advanced communications, and intelligent computing.

This portfolio is designed to capture that convergence.

For Canadian retail investors seeking long-term growth, it offers exposure to five distinct yet complementary businesses that participate in one of the most significant technological transformations of the coming decade.

No one can predict which individual robot, drone, or autonomous platform will ultimately dominate the market. However, by investing across the foundational technologies that make Physical AI possible, investors can participate in the industry's growth while reducing the risk associated with betting on a single winner.

As always, investors should ensure that any portfolio aligns with their own financial objectives, risk tolerance, and investment time horizon. For those with a multi-year outlook, Physical AI may prove to be one of the defining investment opportunities of the 2020s.

 

IBM had a brutal week in markets dropping 25% in one week. Q: is this a good entry point?

 

The selloff in IBM this week was extraordinary.

• Peak-to-trough, IBM lost roughly 25% of its market value in just a few trading sessions, erasing approximately US$67 billion in market capitalization. It was one of the largest one-day declines in the company's modern history.

The question for investors is whether this is:

1. a temporary overreaction, or
2. evidence that IBM's long-term investment thesis has changed.
   
   

My assessment: the long-term thesis is bruised, not broken

I think the market has correctly repriced IBM's near-term earnings power, but it has not destroyed IBM's strategic assets.

Let's separate IBM into its major businesses.

Business	Outlook
Hybrid Cloud (Red Hat)	Still very strong
Consulting	Cyclical, currently under pressure
Software (watsonx, automation, security)	Good long-term prospects but execution disappointed
Mainframe/Infrastructure	Mature business, more cyclical than investors expected
Quantum Computing	Still among the world's leaders

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Quantum changes the equation

This is the part many investors ignore.

IBM is not merely experimenting with quantum computing.

It possesses:

• arguably the world's largest quantum software ecosystem (Qiskit)
• thousands of researchers
• extensive government relationships
• years of error-correction research
• the most mature enterprise quantum platform
• an enormous installed enterprise customer base

Unlike many quantum companies, IBM already has:

• revenue
• cash flow
• global customers
• decades of engineering talent

No one else combines all of those advantages.

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The bear case

The market is worried that AI is changing enterprise spending faster than IBM can adapt.

Several concerns have emerged:

• software sales slowed
• consulting bookings weakened
• some enterprise AI spending appears to be flowing toward hyperscalers and newer AI-native vendors
• management admitted execution issues, leading to a rare pre-earnings warning.

Those are legitimate concerns.

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The bull case

If I look out 5-10 years, IBM still owns several extremely valuable assets:

1. Quantum leadership

IBM remains one of perhaps three companies most likely to build commercially useful fault-tolerant quantum computers.

I'd currently rank them approximately:

1. IBM
2. Alphabet (Google Quantum AI)
3. IonQ

Others may eventually catch up, but IBM remains in the first tier.

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2. AI plus quantum

IBM doesn't need to "win AI."

It needs AI to become another enterprise workload running on IBM infrastructure.

Its strategy is:

• hybrid cloud
• enterprise AI
• quantum
• consulting

Those reinforce one another.

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3. Red Hat

I continue to believe Red Hat was one of the best acquisitions made by any large technology company during the last decade.

It gives IBM credibility inside virtually every Fortune 500 IT department.

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Is this a good entry point?

I would answer:

Yes—but not all at once and tread softly.

This is exactly the type of situation where institutional investors typically scale into positions rather than trying to call the bottom.

If I wanted a full position today, I'd consider something like:

• Buy 40% now
• Buy another 30% if the stock falls another 8–10%
• Buy the final 30% after the next earnings report if management demonstrates stabilization.

That approach accepts that the market may remain volatile while reducing the risk of buying everything before further negative news.

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Would I buy IBM over the next year?

Compared with many large-cap technology companies:

Company	12-month attractiveness
NVIDIA	9.5/10
Qualcomm	9.2/10
Marvell Technology	9.0/10
IBM	8.8/10 after this selloff
Microsoft	8.7/10

IBM has become more attractive because its valuation has compressed substantially, whereas much of the AI sector still trades at demanding multiples.

My conclusion

If I knew nothing about an investor, I'd say IBM is now a reasonable long-term accumulation candidate, particularly for those seeking a combination of cash flow, AI exposure, hybrid cloud, and quantum computing.

A small starter position might be in order.

Discl: at this time we don't own stock in IBM