The real buzz related to AI so far has been concentrated in a small group of mega-cap stocks, and Fidelity Portfolio Manager Asher Anolic has been focusing on semiconductor manufacturers, as well as some software developers that he believes could be key beneficiaries of the global focus on this potentially game-changing technology.
“I see some core companies that are well-positioned at the present time,” says Anolic, who co-manages Fidelity® Growth Discovery Fund (FDSVX), along with Jason Weiner. “As I monitor the speed and adoption of AI tools, I think these companies could continue to experience solid demand.”
In helming the diversified equity strategy with a “go anywhere” approach and a large-cap-growth bias, Anolic and Weiner target the fastest quartile of earnings growers – industry leaders and companies with a proven track record, typically undervalued growth stories and stocks with the potential for price-to-earnings expansion.
So, it’s no surprise that Anolic took note when recent research by Fidelity’s Asset Allocation Research Team declared AI “an X-factor in a new investment regime…a multiyear investment theme that may lead to higher productivity over time, making labor and capital more efficient, facilitating more innovation, increasing consumer buying power, and supporting corporate profit margins.”
Looking to capitalize, the managers have positioned the fund with a sizable stake in software and cloud-services giant Microsoft (MSFT), which they consider the most obvious long-term beneficiary of generative AI. The fund also counts several chip makers that power AI technology among its top holdings as of July 31, including Taiwan Semiconductor Manufacturing (TSM) and ASML Holding (ASML).
AI optimism abounds, notes Anolic, but he cautions that the speed of adoption of AI tools across the economy remains to be seen. “As a new technology, there is a general wariness of the complexity of AI models and a lack of knowledge about how they work,” he explains.
He also notes that AI may pose an economic and societal impact that could lead to increased regulation, further constraining adoption.
“With this in mind, we are closely watching expectations for AI versus the actual innovation occurring,” Anolic says. “We believe the fund is adequately positioned for a slightly over-optimistic market in the near term, but one with likely more opportunities than expected in the long term.”
Looking ahead, the managers plan to rely on Fidelity’s investment-research capabilities to monitor the entire private and public landscape for AI—and all the relative stock valuations—before choosing what they believe will be the best long-term investments for the fund.
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Asher Anolic is a portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Anolic manages the Fidelity and Fidelity Advisor Climate Action Funds, and serves as co-manager of Fidelity Growth Discovery Fund, Fidelity Capital Appreciation Fund, Fidelity Advisor Equity Growth Fund, Fidelity Advisor Series Equity Growth Fund, Fidelity VIP Growth Portfolio, and Fidelity VIP Dynamic Capital Appreciation Portfolio.
Previously, Mr. Anolic co-managed Fidelity Environment and Alternative Energy Fund, and also covered the pharmaceutical sector, global consumer staples, and regional banks. Additionally, he managed the Fidelity Select Pharmaceuticals Portfolio.
Before joining Fidelity in 2008, Mr. Anolic was a summer intern at Bear Stearns. Previously, Mr. Anolic served as a director at Thomson Financial and as an analyst at Herzog, Heine, Geduld, Inc. (Merrill Lynch). He has been in the financial industry since 2000.
Mr. Anolic earned his bachelor of arts degree in political science from Vassar College and his master of business administration degree from the Johnson Graduate School of Management at Cornell University.