AI’s role in gaming innovation is turning pixels into profits
Artificial intelligence is revolutionizing the video game industry, reshaping how games are developed, designed and experienced, says Fidelity’s Priyanshu Bakshi.
- Artificial intelligence has considerably accelerated the development of video games, according to Fidelity Portfolio Manager Priyanshu Bakshi, enabling developers to create more dynamic, interactive and personalized gaming experiences and, by extension, yielding potential investment opportunities within the communication services sector.
- “Imagine a world where video games evolve faster than ever, delivering deeply immersive experiences that feel almost lifelike,” says Bakshi, who manages Fidelity Advisor® Communication Services Fund. “The companies behind these innovations are driving substantial growth, not just in gaming, but also their bottom lines.”
- In helming the equity sector strategy, Bakshi believes a company’s stock price generally aligns with its free cash flow and earnings. He focuses on firms showing profitable sales growth, which he views as a more enduring driver of earnings and cash flow.
- One prominent example of a video game developer that meets Bakshi’s investment criteria is Roblox, a fund holding (as of December 31) that uses AI-driven end-to-end tools to empower creators to build immersive 3D worlds, moderate content, and even implement safety features like age verification.
- This innovation is just one of the ways Roblox has integrated AI into its platform, attracting tens of millions of users, driving free-cash-flow generation and solidifying the firm’s position as a leader in the gaming industry, according to Bakshi.
- He also likes Take-Two Interactive Software, another top-10 position, for its work in leveraging AI to redefine realism in gaming. “The company is setting new standards for immersive gameplay,” says Bakshi.
- Specifically, he notes more-interactive and intelligent non-player characters in blockbuster game franchises, including Grand Theft Auto, as well as increasingly dynamic natural animation, environmental awareness and personalized dialogue that adapts to player actions.
- Such AI-powered advancements have enhanced the player experience and driven profitable sales growth, a cornerstone of Bakshi’s investment philosophy.
- He highlights that AI is amplifying the video game market at an exponential rate, with the number of users skyrocketing in the past 10 years, adding roughly a billion users in that time frame. Moreover, global gaming revenue is projected to be around $200 billion by 2025, according to Statista, creating what he considers an attractive long-term investment environment.
- "The intersection of AI and gaming is more than a technological marvel, it’s a powerful investment opportunity among video game makers," concludes Bakshi. “Furthermore, as the market continues to expand and AI capabilities evolve, I believe businesses at the forefront of this transformation may be poised to deliver outsized returns.”
Fidelity Advisor Communication Services Fund (FGJMX)
Seeks to provide capital appreciation.
Related insights
View all
For specific fund information such as standard performance and holdings, please go to the "Funds Managed" link on this page.
Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice, and you are encouraged to consult your own lawyer, accountant, or other advisor before making any financial decision. These materials are provided for informational purposes only and should not be used or construed as a recommendation of any security, sector, or investment strategy.
Fidelity does not provide legal or tax advice and the information provided herein is general in nature and should not be considered legal or tax advice. Consult with an attorney or a tax professional regarding your specific legal or tax situation.
Past performance and dividend rates are historical and do not guarantee future results.
Investing involves risk, including risk of loss.
Diversification does not ensure a profit or guarantee against loss.
Sector funds can be more volatile because of their narrow concentration in a specific industry. Growth stocks can perform differently from other types of stocks and the market as a whole and can be more volatile than other types of stocks. Value stocks can perform differently than other types of stocks and can continue to be undervalued by the market for long periods of time. • Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. • Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets. • In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation, credit, and default risks for both issuers and counterparties. • Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. • Floating-rate loans may not be fully collateralized and therefore may decline significantly in value. • The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes, and the financial condition of the issuers of municipal securities. • The securities of smaller, less well-known companies can be more volatile than those of larger companies. • The funds can invest in securities that may have a leveraging effect (such as derivatives and forward-settling securities) that may increase market exposure, magnify investment risks, and cause losses to be realized more quickly. • Leverage can magnify the impact of adverse issuer, political, regulatory, market, or economic developments on a company. In the event of bankruptcy, a company’s creditors take precedence over the company’s stockholders. Although the companies that the fund invests in may be highly leveraged, the fund itself does not use leverage as an investment strategy. Changes in real estate values or economic downturns can have a significant negative effect on issuers in the real estate industry. In the event of bankruptcy, a company’s creditors take precedence over the company’s stockholders. Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC.