Portfolio Manager Insights

AI opportunities remain robust amid dynamic landscape

DeepSeek may have changed the near-term trajectory for artificial intelligence, but long-term growth prospects remain promising, says Fidelity’s Rick Gandhi.

By: Rick Gandhi
Updated: 12/1/2025
  • The January release of a free large language model by Chinese startup DeepSeek briefly raised investor concerns that AI growth projections might be overly optimistic, according to Fidelity Portfolio Manager Rick Gandhi, who nonetheless believes the emerging player could ultimately help boost demand for the companies providing essential AI infrastructure.
  • “While DeepSeek may change part of the equation, it is not likely to undermine investors’ original thesis,” explains Gandhi, who co-manages Fidelity Advisor® Convertible Securities Fund with Adam Kramer. “That’s because demand for AI infrastructure remains substantial, and the AI story is still in its earliest stages.”
  • In helming the convertible bond strategy, Gandhi focuses on both capital preservation and capital appreciation within strict risk parameters. The fund normally holds at least 80% of assets in convertible securities, which are hybrid financial instruments that tend to behave like stocks when the underlying share price is high and more like bonds when it is low, according to Gandhi.
  • He explains that when DeepSeek introduced its AI chatbot in January, many investors started to question their assumptions about the growth opportunity for chipmakers, data-center operators, electricity providers and other companies that support AI development.
  • However, he says that demand remains robust, whether it’s for enormous power consumption or the specialized chips that enable AI applications.
  • Gandhi notes that DeepSeek may potentially pave the way for cheaper, less energy-intensive AI applications, while also helping to lay the groundwork for more-sophisticated tools that could drive greater demand over time.
  • He cites this as one reason why many of the stocks that were hit particularly hard following the January 27 DeepSeek announcement quickly regained most of their lost value – and then some – in subsequent months.
  • “The market appears to have concluded that DeepSeek could lead to greater efficiency and sustained growth,” Gandhi believes. “As a case in point, major cloud companies say they are still struggling to keep up with rapidly growing demand.”
  • He notes that the fund’s exposure to AI has, for some time now, included equity holdings in chipmakers Nvidia and Taiwan Semiconductor Manufacturing, and Canada-based electricity power generator TransAlta.
  • “Nvidia is the dominant chipmaker behind AI technology, while Taiwan Semi also makes AI-related chips,” Gandhi says. “Meanwhile, TransAlta supplies some of the massive electricity needs of the AI industry. I believe all stand to benefit from continued growth in demand for AI.”

Securities mentioned were fund investments as of October 31.

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Fidelity Advisor Convertible Securities Fund (FICVX)

Seeks a high level of total return through a combination of current income and capital appreciation.

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