Global AI deployment, which sat at 34% in 2022, continues to rise, demonstrating the unique and paradigm-shifting opportunity it brings to our everyday life. This all-encompassing sea of change is unavoidable and those that don’t take advantage of its power, will suffer. As such, Canada has placed itself among the countries exhibiting high interest in the technology with a 48% rate of AI exploration in 2022.

Despite this, Canada fell behind global AI leaders like China and India who had AI deployment rates of 58% and 57% respectively for that same year. This disparity needs to be corrected if Canada wishes to compete equally in the new global marketplace. So, what are the challenges we currently face in achieving AI parity with the world?

What is plaguing AI’s advance in Canada?

First, there is a significant difference between large and small Canadian businesses when it comes to AI adoption.

According to a 2023 IBM survey, approximately 37% of large Canadian companies (1,000 employees or more) had integrated AI within their operations. However, the overall AI adoption rate among Canadian firms with five or more employees stood at a mere 3.7% as of the end of 2021.

The leading barriers blocking a broader AI adoption among Canadian businesses include limited AI skills and expertise within the companies themselves, data complexity, relatively high costs of hardware and implementation as well as the inability to properly govern implemented AI models, tackle complex integration logistics and overcome scaling challenges.

Scale AI, a consortium of think tanks, academic research groups, and emerging companies, is working to speed up AI integration across the business board, reshaping operational models and educating the workforce. This AI democratization will reduce the possibility of AI expertise and IP from pooling among a small group of individuals and/or corporate entities. Its AI funding structure supports cross-sectoral projects, increasing our competitiveness on the world 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, as well as a 49% interest in Vertex AI Ventures, a company focused on identifying, acquiring, and licensing (IP) and providing AI data management services, etc.

Cedarcross holds a unique position as 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 HGX 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 will give clients a bespoke, cost-effective option to tap into AI’s potential $15.7 trillion USD global economic impact.

The AI cloud computing provider intends to create an 80/20 split between long-term customer leasing contracts, and concept AI R&D. With this long-term goal, Alset plans to leverage 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.

Alset is moving into a niche industry in need. Cloud computing capacity for AI services is scarce. With a limited supply of chips and servers, insufficient computing power and processing, as well as a limited supply of date centres to operate hardware, Cedarcross’ arsenal of Nvidia H100 HGX GPU servers is an extremely hot commodity.

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

With this 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 timetable is in motion, beginning 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 in the hopes of securing 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, Altman is currently seeking trillions in funding to compete with NIVIDIA and TSMC. Regardless, NVIDIA’s AI moat is so large, even with massive funding, it will take decades for Altman to catch up. Cedarcross benefits from this definite advantage.

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.

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