Artificial Intelligence and Investing - A discussion with Fidelity Investments

Artificial Intelligence: The Defining Investment Theme of the Decade

Mark Schoeffel / 05 November 2025

Artificial Intelligence (AI) is no longer experimental technology – it is reshaping industries, business models, and productivity worldwide. In a recent Fidelity webcast that I attended, portfolio managers and analysts discussed how AI is transforming everything from healthcare and finance to energy and infrastructure, and how investors can participate in its long-term growth.  Immediately to follow is a high level summary; following this are my more detailed notes.

1. Why Fidelity Believes AI Is Here to Stay

According to Portfolio Manager Mark Schmehl, the market debate about an “AI bubble” misses the bigger picture. While valuations in some areas appear stretched, the fundamentals continue to improve. “Engineers see what’s coming,” Schmehl noted, “and they’re building tools that are already changing how we work.”

AI adoption is accelerating across both consumer and enterprise sectors, driving lasting productivity gains and creating opportunities that extend well beyond the technology industry itself.

2. Investing Across the AI Value Chain

Annie Wang, Director of Private Equity, highlighted that much of the innovation is emerging in private markets, where start-ups are developing the next generation of AI models, data platforms, and specialized applications.

Fidelity’s investment teams are watching three main areas of evolution:

• Infrastructure: Data centers, cloud computing, and semiconductors – the “picks and shovels” of the AI revolution.

• Model Developers: Companies like OpenAI and Anthropic driving foundational breakthroughs.

• Applications: Practical, domain-specific tools for coding, customer service, and creative productivity.

3. Broad Market Opportunities

Darren Lekkerkerker, who manages a diversified North American equity fund, noted that AI-driven investment opportunities extend far beyond traditional tech holdings.

• Hardware & Networking: Nvidia, AMD, and key data networking firms remain central beneficiaries.

• Industrial & Power Infrastructure: Demand for electricity, construction, and cooling capacity is generating new growth for utilities, engineering, and materials companies.

• Natural Resources: Rising demand for copper, uranium, and industrial inputs supports renewed strength in mining and energy sectors.

4. Productivity and Profitability

AI’s greatest contribution may be efficiency. As Ben Holton, Fidelity’s software analyst, explained, “Saving 30% of a software engineer’s time pays for the AI tool many times over.” Across industries, AI is improving workflow, reducing compliance burdens, and allowing employees to focus on higher-value tasks.

Companies that deploy AI effectively are expected to see stronger margins and improved competitiveness over time.

5. Looking Ahead

All speakers agreed that AI is still in its early stages, but its trajectory is clear.

• Productivity gains will drive revenue and earnings growth.

• Power and data demands will spur infrastructure investment.

• Responsible adoption will remain key as privacy and governance standards evolve.

Schmehl summarized it simply:

“AI will revolutionize everything we do. Don’t fear it—embrace it, learn it, and use it to stay ahead.”

 

Bottom Line for Investors:

AI represents both a technological transformation and a multiyear capital investment cycle. Investors can participate through diversified exposure to hardware, software, data infrastructure, and energy systems that enable this next wave of global growth.

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Overview - Detailed Notes:

The Fidelity webcast explored how Artificial Intelligence (AI) is reshaping industries and investment opportunities. The discussion revolved around:

• How AI is transitioning from experimentation to necessity.

• Its transformative potential across all sectors.

• How investors can participate in AI-driven growth.

Part I: Mark Schmehl & Annie Wang (Fidelity Portfolio Manager & Director of Private Equity)

AI Market Outlook

• Schmehl rejected the idea that AI is in a bubble.

  • There are two “camps”:

    • Engineers (in Silicon Valley) who see limitless potential.

    • Finance professionals (on Wall Street) who are skeptical.

  • He sides with the engineers: AI’s applications are real and expanding.

  • “Maybe overheated, but not a bubble — fundamentals are improving.”

Private Markets as Innovation Hubs

• Annie Wang emphasized that much of the true innovation is happening in private markets:

  • Her team tracks early-stage founders and startups to spot future public-market winners.

  • “The smartest people are in the private world — they’re living in the future.”

AI Investment Evolution

• The journey of AI investing has moved in stages:

  1. Infrastructure (2022–23): “Picks and shovels” plays such as data centers, semiconductors, and cloud providers (e.g., CoreWeave).

  2. Model Builders (2023–24): Companies like OpenAI, Anthropic, and Stability AI gaining scale.

  3. Applications (2025 and beyond): Specialized agents and domain-specific tools for productivity, law, customer support, and coding.

Key AI Use Cases

• Consumer: ChatGPT-like assistants, creative and productivity tools.

• Enterprise: Software development, customer success management, workflow automation.

• Compliance and Finance: Expected to reduce regulatory burden and repetitive work.

Human–AI Collaboration

• Both speakers stressed that AI is an augmenting force, not a replacement:

  • Advisors and professionals should “embrace AI as a tool, not fear it.”

  • Schmehl: “It’s about productivity, not cost-cutting. Smart companies will hire people who can use AI well.”

Future Vision

• Schmehl: “AI is here to stay — it will revolutionize everything we do.”

• Wang: “When smart people work on meaningful problems, great things happen.”

• Both anticipate robotics, compliance automation, and data efficiency improvements as the next wave.

Part II: Darren Lekkerkerker & Ben Holton (Portfolio Manager & Equity Research Analyst)

Investment Focus

• Lekkerkerker manages a diversified, quality-driven portfolio, complementing Schmehl’s growth-oriented style.

• Ben Holton covers U.S. software and focuses on how AI reshapes enterprise efficiency.

AI Infrastructure Boom

• Tremendous investment is flowing into data centers, semiconductors, networking, and power infrastructure:

  • “Demand is accelerating faster than hyperscalers can build.”

  • CapEx is soaring across Microsoft, Amazon, and Google Cloud.

  • Companies are overbuilding deliberately to avoid undersupply.

Winners and Value Chain

• Nvidia remains the dominant winner, with unmatched hardware and ecosystem control.

• Downstream beneficiaries:

  • Networking firms (data flow optimization).

  • Industrial equipment makers (for construction and power systems).

  • Utilities and nuclear services (to meet AI’s energy demand).

Power and Sustainability

• AI’s massive energy needs are an engineering challenge, not a fatal flaw.

• Expect new low-power chip architectures and energy-efficient data centers within 5–10 years.

Enterprise Adoption

• Adoption is faster than past tech waves but still cautious.

• Enterprises focus first on data security, privacy, and regulatory compliance.

• Internal pilots are being tested for workflow automation, email triage, and customer support routing.

Return on Investment (ROI)

• Direct ROI metrics are emerging, especially in:

  • Coding productivity tools (e.g., AI assistants for developers).

  • Operational automation reducing time spent on low-value tasks.

• “Saving 30% of a software engineer’s time pays for the AI tool many times over.”

Natural Resources Connection

• AI indirectly fuels demand for:

  • Copper (wiring, infrastructure),

  • Uranium and nuclear energy (data center power supply),

  • Construction materials (data center buildouts).

• Lekkerkerker sees these as part of a broader “resource renaissance.”

Broader Message

• AI will touch every sector — tech, industrials, resources, and finance.

• Investors should focus on real applications and infrastructure enablers rather than speculative fringe plays.

Part III: Broader Themes Across the Webcast

1. Productivity Revolution

AI is primarily a productivity amplifier, enabling individuals and companies to:

• Automate routine work.

• Enhance decision-making.

• Scale output without increasing headcount.

2. Democratization of Tools

AI allows professionals — including financial advisors — to:

• Auto-summarize meetings.

• Generate client-ready reports.

• Prepare personalized outreach efficiently.

3. Risks and Ethics

• Concerns around AI misinformation, deepfakes, and data misuse were acknowledged.

• Speakers expect regulatory frameworks and industry norms to evolve, similar to how digital advertising and privacy matured over time.

4. Key Takeaway for Investors

• The AI opportunity spans far beyond tech stocks.

• Investors can participate through:

  • Semiconductors and hardware (Nvidia, AMD).

  • Cloud infrastructure and hyperscalers (Amazon, Microsoft, Google).

  • Power and industrial suppliers.

  • Private companies developing new applications.

Closing Messages

• Schmehl: “Embrace AI — it’s not going away. Learn to use it before your competitors do.”

• Wang: “We’re still early — the next wave of innovation will come from passionate founders.”

• Lekkerkerker: “Invest up and down the value chain; AI will drive sustained demand.”

• Holton: “If you’re not using AI personally or professionally yet, you’re already behind.”