Since the 1990s, Canada has been a leader in AI and deep learning, made possible by the research and innovations of the “Godfathers of AI”, Canadians Yoshua Bengio and Geoffrey Hinton. In fact, Canada has 10 percent of the world’s top-tier AI researchers, the second most in the world.
Our favored state drove up the number of AI patents filed by Canadians by 57 per cent in 2022-23 compared to the previous year – nearly three times the G7 average over the same period. So, it’s not surprising Canada is ranked fifth in the world for its AI capacity.
But when ranked on AI infrastructure alone, Canada falls to 23rd. Recently, the Globe and Mail wrote an article entitled “Canada’s AI Infrastructure Does Not Compute” – signaling the size of the problem.If we intend to hold onto our enviable position, we must correct this disparity as soon as possible. Thankfully, Canadian companies like Alset Capital (TSXV:KSUM)(FSE:1R60), are working to sustain our lead.
Alset Capital’s 49% owned investee company, Cedarcross International Technologies Inc. (“Cedarcross Technologies”) is a pure-play high-performance artificial intelligence cloud computing provider, through Cedarcross Technologies, Alset, through Cedarcross, provides the necessary computing capabilities needed to keep Canada’s AI ecosystem thriving.
1) A Canadian AI Innovator
Alset covers the AI gamut. Its portfolio, on top of Cedarcross Technologies, also includes a 49% interest in Vertex AI Ventures, a company focused on identifying, acquiring, and licensing (IP) and providing data management services, etc.
As such, Alset has entered the AI market with a diverse multi-pronged approach:
- Computing Power
- Platform as a Service (PaaS)
- Intellectual Property
Cedarcross creates a considerable moat for Alset because it owns and operates some of the world’s most advanced GPU hardware required for AI computations. Providing access to the underlying algorithmic power developed by NVIDIA, specifically its industry-leading NVIDIA H100 GPUs, Cedarcross leverages its ability to provide scalable AI resources to enterprise clients in real time, without the upfront costs and long-term maintenance of physical infrastructure. This gives clients bespoke, cost-effective options to tap into AI’s potential $15.7 trillion USD global economic impact.
Alset’s revenue model will be an 80/20 split between blue chip customers and concept AI R&D. With this long-term goal, Alset will leverage its current surplus cloud computing power to expand its investment portfolio by investing in AI companies to provide early-stage computing power in exchange for equity in AI models in development.
2) Alset’s Growing Revenue
Well on its way to becoming one of Canada’s fastest growing providers of AI compute solutions, Cedarcross announced yet another formative deal when it entered into a two-year AI Computing leasing agreement that is anticipated to generate $4.0 million USD in revenue with a sizable approx. 80% gross margin over the life of the contract.
Under the deal, Cedarcross will provide an estimated 700,000 compute hours annually, totaling about 1.4 million AI compute hours by the agreement’s end. The fact the contract is with a revered third-party enterprise client, goes to show Cedarcross’ growing influence and capabilities in the lucrative world of AI infrastructure.
Paid Right Away
Not only has Cedarcross structured the agreement for immediate income with a monthly payment plan of approximately $163,333, culminating in an estimated gross margin of $3.2 million by the end of the two-year term, but significant portion of the $4.0 million contract revenue is anticipated to hit Cedarcross’ coffers within the first year, creating an immediate impact on the company’s bottom line and setting up further revenue-generating potential.
Wait, There’s More
Alset signed a deal with Ceti AI for the sale of five Nvidia H100 HGX 8GPU servers which would generate an approximate gross revenue of $1.68 million for Alset.
“’This deal with Ceti AI represents a significant milestone for Cedarcross,” said Morgan Good, CEO of Alset. “It not only enhances their revenue streams but also reinforces their market position as a leader in supplying high-performance computing GPU servers. Alset is committed to supporting Cedarcross as it continues to expand and excel on its business model.”
Another Quick Financial Turnaround
Like the previous agreement, Ceti is coming up with the cash quick. Within two business days of the sales agreement being signed, it has agreed to pony up a $100,000 deposit with an additional $737,500 within fourteen days and the remainder coming due seven days after the servers are received and accepted by Ceti with delivery expected to occur no earlier than May 17, 2024.
3) Expanding Market Presence
Even with all this good news, Cedarcross refuses to sit on its laurels and is actively enhancing its market power through a recent AI server distribution deal with Earthmade Computer Inc., an authorized distributor of Super Micro Computer Inc
Super Micro Computer, Inc., is no small fish trading on the NASDAQ under the symbol SMCI. It’s a global leader covering the tech gamut with the provision of leading-edge innovation in Enterprise, Cloud, AI, Metaverse, and 5G Telco/Edge IT Infrastructure. Sounds comprehensive? You bet, Super Micro Computer, Inc. pulled in approximately $3.6 billion in revenue in its latest reported quarter.
This company is known for stocking one of the broadest selections of Nvidia-Certified systems providing the most performance and efficiency from small enterprises to massive, unified AI training clusters with the new Nvidia H100 and H200 Tensor Core GPUs.
Cedarcross’ distribution deal with Earthmade clearly demonstrates the strength of the company’s industry relationships with leading hardware suppliers giving the Cedarcross access to secure competitive pricing and superior delivery timelines for Earthmade’s industry-leading Nvidia GPU HPC servers.
Market presence aside, this agreement also expands Cedarcross’ business portfolio with another vertical on top of its current computing leasing segment which is already capable of generating approximately $2.0 million annually with a whopping anticipated approximate net gross margin of approx. $1.6 million per year. Talk about win-win.
4) Timing is Everything
“Today, we are making a significant investment to boost our economic growth. This will keep Canada a global leader in AI and ensure we are at the very cutting-edge of new technologies…”
–The Hon. Chrystia Freeland, Deputy Prime Minister and Minister of Finance
In this year’s budget, released on April 16th, the Canadian government reached deep into its pockets and made a commitment to spend $2.4 billion CAD to bolster the country’s AI sector.
Cedarcross’ initiatives are in sync with this federal effort as a substantial portion of it will be allocated to funding computing capabilities and technical infrastructure. The Canadian government’s significant investment emphasizes the critical importance of AI computing in driving technological innovation and economic growth.
5) A Confluence of Forces
Cedarcross leverages this rapidly growing need with cutting-edge hardware and superior cloud AI solutions. The company’s expanding contract base is supported by a strategic partnership with a major North American data center provider boasting over 40 facilities, ensuring seamless connectivity and reliability, supported by fiber optic connectivity, UPS backup, and localized computing capabilities.
Add this to Cedarcross’ deep industry relationships with leading suppliers and distributors, and you have best-in-class turnkey compute power solutions for enterprise clients, driving revenue and scalability while meeting market demand for computing power.
Conclusion
In the end, Alset’s visionary investment strategy and vibrant revenue models could not only secure Canada’s future in AI but also provide significant value growth for shareholders through its diverse and lucrative portfolio of investee companies. What are you waiting for? Contact Alset Capital today and join the journey!
This is part of an AI awareness campaign and not financial advice, while FG 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.
