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National Bank Financial Downgrades Royal Bank of Canada (RY) Stock, Reduces PT

On May 30, National Bank Financial downgraded Royal Bank of Canada (NYSE:RY)’s stock from “Outperform” to “Sector Perform,” reducing its price target to C$177.00 from the prior target of C$179.00. This revision follows the Royal Bank of Canada (NYSE:RY)’s Q2 2025 results, which didn’t meet expectations as a result of increased Provision for Credit Losses (PCLs) and a softer performance in its Capital Markets segment compared to expectations.

An exterior view of a modern banking building, showcasing its financial stability and reach.

In the Capital Markets segment, its net income of $1,202 million decreased $60 million or 5% YoY, with growth in total revenue and the impact of foreign exchange translation being more than mitigated by increased non-interest expenses and higher taxes.

Royal Bank of Canada (NYSE:RY)’s consolidated results exhibit an increase in total PCL of $504 million from a year ago, which includes a $324 million increase in PCL on performing loans. The PCL on loans ratio of 58 bps rose by 17 bps from the prior year.

This was primarily because of unfavourable changes to its macroeconomic forecast and scenario weights, demonstrating the impacts of trade disruptions (including tariffs). Notably, Royal Bank of Canada (NYSE:RY)’s commentary hinted at a challenging environment for credit and growth, issues that are relevant across the sector.

While we acknowledge the potential of RY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than RY and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now

Disclosure: None.

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When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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