Why Billionaires Are Betting Big on Canadian National Railway (CNI) in 2025

The railroad industry has long been a bastion of steady, if unspectacular, returns. But in 2024–2025, Canadian National Railway Company (CNI) has emerged as a standout name among billionaires and institutional investors, even as macroeconomic headwinds and AI-driven tech booms dominate headlines. With 12 billionaire investors holding stakes in the company as of Q4 2024—a figure that vaulted CNI to 9th place on Insider Monkey’s list of the Best Canadian Stocks According to Billionaires—the railroad’s appeal is undeniable. Here’s why investors with deep pockets are doubling down.

The Billionaire Playbook: Why CNI?

Billionaire investors prioritize resilience and long-term value, and CNI checks both boxes. Its three-coast network—spanning the Atlantic, Pacific, and Gulf of Mexico—offers unmatched logistical reach in North America. This geographic advantage, bolstered by its recent merger with the Iowa Northern Railway in March 2025, strengthens cross-border trade routes and reduces reliance on congested hubs like Chicago.

Operational metrics back up the bullish sentiment. In Q1 2025, CNI reported a 5.1% rise in revenue ton-miles and a 7.0% increase in carloads, signaling stronger demand and efficiency gains. These improvements, paired with sustainability-focused tech investments—such as predictive maintenance systems and fuel-efficient locomotives—position CNI to capitalize on ESG-driven investment trends.

Valuation and Upside: A Case for Steady Growth

While AI stocks have siphoned attention from “old economy” sectors, CNI’s fundamentals remain compelling. With a forward P/E ratio of 17.3x—below the S&P 500’s ~20x multiple—and a projected 10%–15% EPS growth in 2025, the stock offers a margin of safety. Analysts’ average price target suggests a 16.61% upside, making it a standout in an industry often dismissed as low-growth.

The company’s balance sheet also shines. CNI has reduced debt by $1.2 billion since 2022, while maintaining a BBB+ credit rating, which keeps borrowing costs low. This financial flexibility allows reinvestment in infrastructure—like the Iowa Northern merger—and dividends, which have grown steadily over the past decade.

Navigating Headwinds: CNI’s Playbook

The railroad sector faces challenges, including U.S. trade tariffs, supply chain bottlenecks, and labor negotiations. CNI’s response? Focus on bypass routes around Chicago—a move that cut transit times by 20% for key Midwest-East Coast routes—and digital tools to optimize scheduling and reduce idle time. These strategies have already paid off: in 2024, the company’s carload volume grew by 4.3%, outpacing the U.S. rail industry’s 1.8% average.

The Billionaire Contrarian Angle

The real story here is the contrarian bet by billionaires. While short-term investors chase AI’s volatility, CNI’s investors—many of whom are value-focused—see a defensive play. The UBS Billionaire Ambitions Report 2024 highlighted a shift toward “resilience-focused” portfolios, and CNI’s diversified cargo mix (energy, agriculture, industrial goods) aligns perfectly. Even in a slowdown, railroads remain a necessity for moving bulk goods, making them recession-resistant.

Risks and the Elephant in the Room

No investment is without risks. CNI’s reliance on cross-border trade exposes it to geopolitical risks, such as U.S.-China trade tensions or Canadian labor disputes. Additionally, hedge fund skepticism persists: while 56 hedge funds held the stock as of Q4 2024, its billionaire investor count (12) trails peers like Kansas City Southern (35). Still, CNI’s strategic moves—like expanding e-commerce rail services and partnering with ports for “rail-to-ship” automation—are addressing these concerns.

Conclusion: A Steady Hand in a Volatile World

Canadian National Railway’s appeal to billionaires isn’t a fluke. With 12 high-net-worth investors backing it, a 9th-place ranking among Canadian stocks, and a 16.61% upside potential, CNI offers a blend of defensive stability and growth that’s hard to ignore. Its operational improvements, strategic mergers, and valuation discounts relative to the market make it a rare “buy” in an era of AI hype.

The data is clear: in a year where 30% of S&P 500 companies missed earnings estimates, CNI’s consistent performance—driven by 5.1% revenue growth and 7% carload gains—proves that railroads still have room to run. For investors seeking steady returns in turbulent times, CNI is a locomotive worth boarding.