Enterprise AI In Canada: Our Place In The New Digital Economy

The global adoption of AI technology, standing at 34% in 2022, continues to soar, showcasing the transformative and paradigm-shifting opportunities it offers our daily lives. This sweeping tide of change is inescapable, and those who fail to harness its power will inevitably fall behind. Canada has positioned itself among the nations exhibiting a high level of interest in AI, with an impressive 48% rate of exploration in 2022.

However, Canada lags behind global AI leaders like China and India, which boasted AI deployment rates of 58% and 57%, respectively, during the same year. Bridging this gap is crucial if Canada aims to compete effectively in the evolving global marketplace. So, what are the key challenges we currently face in achieving AI parity with the world?

What is plaguing AI’s advance in Canada?

The integration of AI technology exhibits a stark contrast between large and small Canadian enterprises.

Recent findings from an IBM survey conducted in 2023 reveal that around 37% of major Canadian corporations, defined as those employing 1,000 or more individuals, have successfully implemented AI solutions within their operational frameworks. In contrast, the overall adoption rate of AI across Canadian firms with five or more employees stood at a mere 3.7% as of the conclusion of 2021.

This disparity underscores the challenges faced by smaller businesses in embracing cutting-edge technologies and the potential competitive advantages that larger organizations may possess in leveraging AI’s transformative capabilities.

The leading obstacles preventing widespread AI adoption among Canadian businesses are the limited AI skills and expertise within the companies themselves, data complexity, relatively high costs associated with hardware and implementation, and the inability to properly govern implemented AI models, tackle complex integration logistics, and overcome scaling challenges.

Scale AI, a consortium comprising think tanks, academic research groups, and emerging companies, is working to accelerate AI integration across various industries, reshaping operational models and educating the workforce. This democratization of AI will reduce the potential for AI expertise and intellectual property to be concentrated among a small group of individuals or corporate entities. Its AI funding structure supports cross-sectoral projects, enhancing Canada’s competitiveness on the global stage.

A Canadian AI Innovator

These on-going efforts are helping to fuel Canadian AI firms like Alset Capital Inc. (TSXV:KSUM)(FSE:1R60, WKN:A3ESVQ), a pure play artificial intelligence cloud computing company working to expand AI’s business footprint in a unique multi-pronged approach:

1. Computing Power
2. Platform as a Service (PaaS)
3. Intellectual Property

As such, Alset’s portfolio includes a 49% interest in Cedarcross International Technologies, a provider of turnkey AI cloud computing solutions, and a 49% interest in Vertex AI Ventures, a company focused on identifying, acquiring, and licensing intellectual property (IP) and providing AI data management services.

Cedarcross holds a unique position as it owns and operates some of the world’s most advanced GPU hardware required for AI computations. By providing access to the underlying algorithmic power developed by Nvidia, specifically its industry-leading Nvidia H100 HGX GPUs, Cedarcross leverages its ability to offer scalable AI resources to enterprise clients in real-time, without the upfront costs and long-term maintenance associated with physical infrastructure. This approach gives clients a tailored, cost-effective option to tap into AI’s potential $15.7 trillion USD global economic impact.

The AI cloud computing provider aims to create an 80/20 split between long-term customer leasing contracts and AI research and development. With this long-term goal, Alset plans to leverage surplus cloud computing power to expand its investment portfolio by investing in AI companies, providing early-stage computing power in exchange for equity in AI models under development.

Alset is venturing into a niche industry with significant demand. Cloud computing capacity for AI services is scarce due to a limited supply of chips and servers, insufficient computing power and processing capabilities, and a limited number of data centers to operate hardware. Cedarcross’ arsenal of Nvidia H100 HGX GPU servers is an extremely valuable asset in this market.

This strategic partnership has allowed the company to establish unique hardware supply and data center relationships. In fact, Alset’s data center is leased from a trusted partner with over 40 data centers across 11 strategic North American markets. The partner’s data center ecosystem includes prime colocation and interconnection hubs and seven hyperscale capacity facilities.

With the extensive demand for Nvidia H100 HGX GPU servers, Cedarcross expects approximately 80% margins on server rentals with an estimated 1.5-year payback period on hardware purchases.

Alset’s timeline is in motion, beginning in Q2 2024 with the acquisition of 10 Nvidia H100 HGX GPU servers. Phase two will commence after the server acquisition and will focus on leveraging cash flows to scale the company’s hardware fleet. Phase three will start in H2 2024, with the company seeking strategic investment to rapidly scale its hardware fleet, aiming to secure 250 servers by the end of 2025.

An Interesting Side Note

Right now, the internet is focused on cryptocurrency, but in a recent podcast interview, Sam Altman, the CEO of OpenAI, told Lex Friedman that “compute” will be the dominant “currency of the future”, overtaking both fiat and crypto as it asserts its status as the most valuable commodity in the world. This is no idle observation, as Altman is currently seeking trillions in funding to compete with NVIDIA and TSMC. However, NVIDIA’s AI advantage is so significant that even with massive funding, it will take decades for Altman to catch up. Cedarcross benefits from this definite edge.

This is part of an AI awareness campaign and not financial advice, while EG is a firm believer in this company and the AI sector this is not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. For more information on our policies please click here.