AI on the Horizon: December 11, 2025

Canada’s latest AI news on the economy, society, and policy. In the last decade, buzzwords like the metaverse, digital transformation, and crypto have echoed from the rooftops of tech firms. In the last couple of years, AI has gone from buzzword to the backbone of markets, government funding, and venture capital.

AI has been queried substantially more by Canadian web searches than cryptocurrency since the launch of ChatGPT, peaking above Bitcoin’s early rise in 2017. The Canadian economy adopted AI at twice the rate it did the previous year, and the federal government appointed its first-ever AI minister. Whether we’re in the AI boom, bust, or bubble—we pause to take stock of our eight previous issues and consider what is on the horizon for 2026.

AI & Labour

AI won’t replace workers, but AI will be ubiquitous (or in some cases, compelled) in all forms of white-collar jobs. Read August 21 quick take.

On the Horizon: As we write this, Microsoft Word attempts to predict the next word. We believe the unintentional use of AI will become as common as opening your web browser.

AI & The Public Service

Public sector AI adoption will be cautious, clear, and calculated. Bespoke, low-risk, and curated AI uses are already being deployed across Canada’s federal agencies. Read September 4 quick take.

On the Horizon: Government service and program navigation remain arduous. A potential solution is to leverage LLMs to consistently retrieve and assess eligibility for programming, which is closer than you would expect.

AI & Firms

Learning by doing is still the trend for many early adopters of enterprise GPTs, but it won’t appear on the P&L as impactful as initially thought . Read September 18 quick take.

On the Horizon: The availability, affordability, and literacy of generative AI are beginning to reach an equilibrium point in many white-collar industries. We expect these pilots to soon become organization-wide deployments, and that a K-shaped productivity growth period will begin among adopters in larger tech-adjacent firms that invested early in training and experimentation and small firms in similar spaces.

AI & Infrastructure

Canada is not in the same data center construction frenzy as most other nations appear to be. The billion dollars in Canadian AI infrastructure investments pale in comparison to the investment in the private sector and by some accounts, that is nearly US$26 billion in investment globally from power generation to chip making in 2025. Read October 2 quick take.

On the Horizon: Canada’s provincial demand for data centre infrastructure varies widely. We expect the deployment of smaller sovereign clouds in data-sensitive industries like healthcare, defense, and the public sector on home soil.

AI & Robotics

Although physical AI for general tasks is a long way out, we expect that the sheer efficiency gains in computing and sensors will bring C3PO sooner rather than later. But will Canadians tolerate it folding clothes, or will it bring a renaissance to more specialized, dexterous tasks in manufacturing first? Read October 16 quick take.

On the Horizon: General-purpose robots are a real possibility in 2026 for the manufacturing sector that requires human dexterity and semi-routine physical tasks.

AI & Energy

Canada’s clean energy production is still, and will always be, a finite resource. The growth in data centre demand will need the energy to fuel its expansion. Rome was not built in a day, nor will Canada’s energy production in keeping up with AI data center propositions. Read October 30 quick take.

On the Horizon: As many tech giants invest heavily in energy production, Canada will need to focus on power, water, and land availability to meet the requirements of AI compute projects. Expect energy regulations and reform to take centre stage in Canada despite the fever pitch for significant sovereign AI expansion.

AI & Innovation

We highlighted Canada’s innovation ecosystem’s ability to capitalize on the emergent properties of AI-driven discovery. When it comes to the commercialization process, will Canada’s innovators be the turtle or the hare? Read November 13 quick take.

On the Horizon: With a strong emphasis on domestic innovation and capital investment supports in Canada’s federal budget, it’s one of the best times to be an upstart entrepreneur. Capital-intensive ventures should be more likely to stay and grow in Canada, so we can be cautiously optimistic about the retention and growth of innovative businesses on home soil.

AI & Retail

With Black Friday and Cyber Monday in the rear-view mirror it’s clear that AI impacted shopping growth as many had suggested. Canadian shoppers used AI to find the best deals globally, eclipsing both sales and orders year over year. Read November 27 quick take.

On the Horizon: Economic uncertainty looms, so finding the best bang for your buck is something AI might be a boon for, and Canadians certainly took advantage of this. It might not be rosy for the ‘buy Canadian’ mantra, as Canadians were most likely to find the best ‘global’ deals. Local businesses will certainly face increasing challenges in the AI-fuelled shopping world, and we expect this to be a growing challenge for consumer goods producers in Canada.

Keeping the ball in our court

While Canada’s AI ecosystem is healthy, and our innovators are competitive, we typically don’t take first prize. Whether that’s a fact of economic scale or our persistent late-stage commercialization struggles, digital technologies tend toward a winner-takes-all approach to success.

But are there niches, windows of opportunity, or sectors in which Canada’s AI-native firms can partner to lead globally?

Canada has a globally competitive advantage in innovation across areas such as clean tech, natural resource extraction, and life sciences. If Canada is playing to win, one trophy is better than a stack of participation ribbons. AI, as a general-purpose technology, has the potential to augment productivity in our inventive and economic opportunities. But without a clear, concerted focus on a specific goal for our national AI strategy, we are hurting our capacity to drive innovation-led economic growth.

We’ll see you again in the new year, but until then, thanks for gazing at the horizon. To find out more about Canada’s technological strengths, check out our research on Assessing Competitive Advantage With Intellectual Property.