Sovereign AI
From Infrastructure to Applied Capability
Canada’s sovereign AI conversation circles around infrastructure - how much compute we can build, how fast we can spin up data centres, and which domestic firms can anchor them. Important? Absolutely. But sovereignty isn’t won in server racks.
It’s decided in the applied capabilities that run on top of that infrastructure - the systems that make high-stakes decisions, protect our interests, and deliver tangible economic returns.
If we treat compute as the substrate rather than the finish line, we can focus on where Canada already has footholds, and where it can lead.
From Infrastructure to Capability
Defence-grade decision tools
Canadian companies like CAE are moving beyond simulation into digital twins that support live operational decisions - giving commanders real-time course-of-action analysis and a shared operational picture. The sovereignty play here isn’t just the hardware; it’s owning the models, scenarios, and telemetry contracts that define how those systems think.
Precision-health platforms
The federated genomics backbone (CanDIG) is built to keep health data under provincial custodianship while enabling national-scale analysis. The Canadian Genomics Strategy and precision-health initiatives aim to scale this into a true national asset. Translation into clinical settings is already happening via UHN’s AI Hub and Vector’s health partnerships — real deployments, not endless pilots.
Industrial optimization
Scale AI (Canada) — the Montréal-based Global Innovation Cluster — is funding production projects in logistics, aviation maintenance, retail demand forecasting, recycling, and more. These are not proofs-of-concept; they’re operational systems where AI directly influences GDP and productivity.
These examples show Canada isn’t starting from zero - but without deliberate connection between infrastructure investments and applied domains, we risk building compute that mostly runs workloads designed, owned, and monetised elsewhere.
Infrastructure Without Capability Is Dependency
Infrastructure without applied capability creates a new kind of dependency. Canada’s Sovereign AI Compute Strategy - and the $240M investment to anchor Cohere’s expansion into an Ontario data centre — is a strong example of how domestic firms can be positioned to leverage sovereign compute. The opportunity now is to ensure that this infrastructure is directly tied to Canadian-owned applications and IP, locking in the value for our economy and national priorities.
Other jurisdictions are already tying infrastructure to capability. The EU’s €200B InvestAI program pairs gigafactories with targeted applied outcomes in defence, health, and industry. They aren’t just building capacity - they’re locking in how it will be used.
Canada’s Applied Capability Playbook
Procure the service, not the servers. Tie federal and provincial AI investments to measurable operational results - faster decision cycles, lower downtime, better health outcome - with mandatory IP residency clauses.
Standards as statecraft. Publish open reference stacks - data contracts, evaluation suites, safety envelopes - for priority capability areas, and require conformance for public funding.
Capital that stays. Patent-box incentives, return-of-rights clauses, and co-investment triggers to keep publicly funded IP in Canadian hands.
Energy–compute compacts. Guarantee low-carbon power for AI infrastructure in exchange for grid-stability services like forecasting and demand shaping.
What to Watch in the Next 12 Months
Do Scale AI (Canada) awards skew toward measurable productivity gains rather than proofs of concept?
Do defence-grade twins move from training environments into live operational contexts for RCAF/NORAD?
Do precision-health deployments cross from pilot to reimbursed clinical use, with drift monitoring in place?
The Bottom Line
Infrastructure is the foundation - but sovereignty is secured in the outcomes. Like the EU, Canada must lock in how its sovereign AI investments will be used, tying them directly to applied capabilities in defence, health, and industry.
