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Five key trends shaping the Canadian technology industry in 2025 and how they might change

In this overview, we examine some of the developments that defined Canada’s technology landscape last year.
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By Chris Johnson , 

Communications, Media & Technology Industry Leader, Canada

03/12/2026 · 8 minute read

The technology sector is entering a pivotal phase of transformation, both in Canada and globally. In 2025, key developments included rapid advancements in quantum computing and a wave of mergers and acquisitions among technology companies driven by AI-powered innovations. At the same time, Canadian telecom providers sought to revolutionize connectivity, while rapid AI adoption exposed new skilled labour shortages that technology alone could not resolve. In this overview, we examine some of the developments that defined Canada’s technology landscape last year.

1. Quantum computing enters operational phase

Often overshadowed by the sheer hype and potential of AI applications, quantum computing has seen more modest advances in recent years — not yet sharing the spotlight or actionable vision that its AI counterpart currently commands. 

Canada has quietly spent the past few years building a world-leading, Canada-based quantum ecosystem — focusing on cutting-edge research, innovation, and practical business applications that will heavily augment traditional computing needs with exponentially growing processing power. In 2025, the National Quantum Strategy provided $400 million to advance research, talent development, and commercialization within the Canadian-based quantum sector. Additionally, the 2025 federal budget included several new and updated funding opportunities for quantum initiatives over the next five years, with targeted allocations for key sub-sectors such as defence, finance, and healthcare. 

Canadian quantum companies also made notable strides. These included the development of the first-ever error-resistant, quantum-integrated chip platform and the advancement of quantum biosensors for non-invasive brain monitoring into the testing phase. Lastly, the Canadian Space Agency has funded the Quantum Encryption and Science Satellite (QEYSSat) project, set to launch in 2026, which aims to test the feasibility of transatlantic quantum key distribution. 

In summary, government funding of quantum computing is at an all-time high, Canada is a key global contributor to quantum advancements, and several “first-ever” tests and projects are due to start in 2026, building on innovations in 2025. Quantum will not replace traditional computing, but the eventual augmentation will lead to explosive innovation and realization. 

2. AI helps spur a return to heavy mid-market M&A activity

The “COVID-19 goldrush” — the brief period of explosively reactive innovation between 2020 and 2022 — marked by skyrocketing valuations, low lending rates, and unprecedented capital deployment — was an exciting and unpredictable time. Across the globe, companies rushed to integrate, expand, and supplement their operations, doing so as quickly as possible — sometimes several years ahead of schedule. This period saw massive staffing increases, new product launches, aggressive pivots, and corporate priorities in the double-digits. 

These conditions created the perfect storm: inventory dropped, valuations exploded, and economic pressures helped push interest rates toward normalization. Broad M&A activity continued — albeit at a slower pace nationally — but technology-specific deals faltered. Many companies were overextended, overstaffed, and overvalued, necessitating prompt right-sizing alongside purposeful innovation. 

Fortunately, AI has come to support and enable both endeavours. Much like the “dot.com” boom before it, AI has come to represent, solve, and support nearly everything — even if some of it might actually be automation with a marketing spin. A high number of companies have at least considered how AI can help, change, or replace their business. Those without the luxury of time (nearly everyone) have had to quickly pivot their business to incorporate AI into their products and services, and almost all of them at a pace they could not fully appreciate or handle. 

This feels like a natural progression of a typical technology bubble. A new epoch-changing event occurs, and many rush to capitalize on it. The delta between valuations and practical applications widens to unsustainable levels, eventually leading to rapid consolidation and acquisition, leaving only a few key independents and several mega corporations. However, this shift did not appear to materialize in earnest in 2025. 

3. Canadian telecom pursues new “call waiting” 

Canada stands out as a leader in telecommunications, with 95% of Canadians having access to the mandated minimum high-speed internet and 99% having cell phone coverage. This achievement reflects the country’s competitive spirit, the integration of public and private sector funding, and a long-standing commitment to keeping Canadians well connected. However, this success also brings its own set of challenges.

By connecting nearly every Canadian through both cell phone and internet services, the Canadian telecom market has become saturated. Historically, telecom companies generated supplemental revenue streams through value-added services — such as data cap surcharges, caller ID, and the aforementioned “call waiting.” However, infrastructure has now matured to the point where unlimited access with every feature is the norm. As birth and immigration rates steadily decline, the opportunity for new customers is also declining. This forces a form of cannibalism in the market, where acquisition from peers becomes a growth strategy and average revenue per user plummets. 

What will the next-generation telecom landscape in Canada look like? Regional players are likely closely monitoring changes to the Canadian Radio-television and Telecommunications Commission (CRTC) regulations on data access and public availability, wireless wholesaling, and the anticipated expansion of IoT access. At the same time, they are likely tracking submissions for provincial and federal funding opportunities earmarked through 2030, aimed at expanding high-speed access to the remaining 5% of the country. 

But if you’re a key player in the industry, what comes next? Today, many banking leaders no longer see themselves as banks — they view themselves as technology companies delivering financial products and services. The same will hold true for Canadian telecom companies. While their roots remain firmly invested in the sector they helped create, many aspire to transform into something more. Bold decisions and new, innovative partnerships are creating significant ripples throughout the industry.

4. AI adoption and its effect on labour

AI is a pervasive and enigmatic topic in today’s business landscape, widely recognized for its potential to transform what was once considered science fiction into standard business practice.

It is a central focus of discussion and investment, often seen as a solution to a wide range of challenges. Not since the commercialization of the internet has a new hammer so thoroughly reshaped what is possible. When fully realized and implemented, AI is expected to usher in a new epoch of technological advancement, marking a clear distinction between the period before and after its adoption. 

AI is not the first technology-driven market shift. Many industry professionals have experienced previous waves, such as the dot-com bubble. The opportunities presented by AI are vast and potentially limitless. AI can support, augment, or automate nearly every business process, reducing production time, minimizing human error, decreasing losses, and enhancing the security and sale of products, services, and property. It also has the potential to unlock higher productivity at a lower cost.

Despite rapid technological progress, AI remains in an evolutionary state. While advancing quickly, a significant challenge limits its full potential — human factors. AI, as it stands, is still simply a hammer — only as good as the person wielding it. However, unlike a hammer, which is well understood, long perfected, and refined to a simple form, AI still remains in a state of metamorphosis. Its requirements are continually shifting, its capabilities are constantly advancing, and the expertise needed to use it effectively is always changing.

In the collective race to implement and differentiate, some organizations are moving beyond a sustainable pace, often laying tracks while the train is already moving. Staffing models are changing, and employees will need to adapt and learn accordingly. Although 2025 was anticipated to be a pivotal year for agentic AI, it also highlighted the risk of moving too quickly.

AI-based education and skills remain novel, and in a space that is changing faster than curricula can be written, skill gaps are inevitable and likely to widen. The transfer of knowledge is expected to be inconsistent and fragmented, with AI expertise increasingly regarded as a valuable currency. This trend is widely expected to continue into the foreseeable future — until adoption stabilizes, innovation and implementation slow, or both. 

5. Digital infrastructure and the rise of the sovereign cloud

Canada has historically relied heavily on strategic partnerships and investment to support and drive its economy, and this remains especially true in digital infrastructure. As of 2025, nearly 75% of data centres in Canada, measured by total power draw, are foreign-owned, predominantly led by US hyperscalers — multinational enterprise tech firms with household names. Additional investments are expected in the near future.

However, this dynamic is shifting. The Canadian government has established the Canadian Sovereign AI Compute Strategy — a multi-faceted plan designed to mobilize domestic investment in AI solutions, high-capacity digital infrastructure, and the procurement of goods, technology, and services to support Canadian companies in this sector. The government has also announced plans to explore the development of large-scale commercial AI data centres in Canada, with capacities exceeding 100MW. Similar strategies are taking shape globally, including the EU’s recently announced European Data Union Strategy, which prioritizes safeguarding its data sovereignty.

The opportunity for Canada’s data centres and digital infrastructure is vast and growing. Realizing this potential will require strategic partnerships and global alliances, with development unfolding over several years. Still, the coming years will bring a significant leap in Canadian digital life, even if the infrastructure isn’t entirely domestic.

In summary

2025 saw a notable shift for Canadian technology. The post-COVID lull seems to have settled, with right-sizing largely complete. Innovations in quantum computing, data distribution, AI, and telecommunications are positioning the country for several key wins over the next few years. A more digital-first national budget has been approved, and a renewed focus on data and digital infrastructure sovereignty will create new opportunities to strengthen the industry. This period marks an exciting phase of growth and transformation. 

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