Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
AI frenzy
The Scotiabank research team used every single analyst they have in a report on AI released Monday judging by the number of people listed on the research report. Here are some excerpts from the report summary,
“Of all the companies currently addressing AI, we think Google is the best positioned, offering the only truly full-stack AI solution, from custom chips to massive data centres to heavily used platforms to applications. And, in our opinion, Google also possesses the best combination of data, infrastructure, distribution, investment war chest, and monetization … We also see OpenText Corporation as well positioned for direct AI revenue generation through its secure, enterprise-focused Aviator AI tools … The oil industry is uniquely positioned to take advantage of AI because of the availability of massive amounts of legacy operating data and the adoption of machine learning and big data analysis by most of the Oil & Gas operators already … The immense power required for data centres and AI demands significant and reliable sources of electricity and capacity, leading to an unprecedented surge in power and energy infrastructure requirements … . In Canada, we also see TransAlta Corporation and Capital Power Corporation benefiting from these themes. Other winners include renewables developers (including NextEra Energy, Inc. and Brookfield Infrastructure Partners LP) … . AI is creating a new class of winners in the real estate sector by driving demand for data centres, enabling operational efficiencies in property management, and transforming care in senior housing … We believe Dream Industrial REIT, and to a lesser extent Granite REIT, are positioned to benefit from the explosive growth in demand for data centres”
Earnings takeaways
The soon-to-be-retired Goldman Sachs chief strategist David Kostin found eight takeaways from U.S. earnings season so far,
“We highlight eight observations from the earnings season so far: (1) The frequency of earnings “beats” has been unprecedented outside of the COVID period; (2) Earnings beats have been driven by both sales and margins; (3) Investors are not rewarding most earnings beats; (4) S&P 500 Q3 2025 EPS growth is tracking at 8 per cent year/year, a continued deceleration; (5) Company guidance and analyst earnings revisions have been solid; (6) Mega-cap AI capex spending continues to exceed expectations; (7) Large-cap US companies are increasingly focused on labor efficiency; (8) Bank lending and the corporate credit cycle are under scrutiny”
Timing concerns
BofA Securities equity and quant strategist Victoria Roloff is running the firm’s most reliable market timing gauge, the sell side indicator, and finds investors bullish but not dangerously so,
“The Sell Side Indicator (SSI) is a contrarian sentiment signal that tracks sell side strategists’ average recommended allocation to equities in a balanced fund. The indicator inched up from 55.5 per cent to 55.7 per cent in October as the S&P 500 locked in its sixth straight month of gains (up 2 per cent month-over-month), the index’s longest streak since 2021. The 20-basis points increase in the SSI suggests strategists are incrementally more bullish but is a relatively small move vs. the average m/m change of 50bp over the last 10 years … The SSI has been a reliable contrarian indicator. In other words, it has been bullish when Wall Street was extremely bearish and vice versa. The indicator remains in ‘Neutral’ territory but is closer to a ‘Sell’ signal than a ‘Buy’ (2.1ppt vs. 4.4ppt). Although the SSI is more bullish than bearish, its current level of 56 per cent is still well below levels reached in prior market peaks (typically more than 59 per cent) and implies a healthy S&P 500 price return of 13 per cent over the next 12 months – one of five inputs in our S&P 500 target”
Bluesky post of the day
These are the most extraordinary companies in history
www.downtownjoshbrown.com/p/the-most-e…
— Downtown Josh Brown (@downtownjoshbrown.bsky.social) November 1, 2025 at 11:02 AMDiversion
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