Growth

U.S. stocks are the most attractive globally

With a global investment mandate, Fidelity's Bill Bower sees many U.S. stocks as best positioned for strong, durable earnings growth, particularly semiconductor & semiconductor equipment manufacturers and cloud infrastructure providers.

  • U.S.-based companies are positioned to experience growth for many years, given their compelling products and brisk, sustainable demand from multiple end markets, says Fidelity Portfolio Manager Bill Bower.
  • "When I look across the world at the industries with the strongest multiyear growth potential, many of the best-positioned companies are domiciled in the U.S.," says Bower, who manages Fidelity Advisor® Global Capital Appreciation Fund.
  • In helming the global equity portfolio, Bower favors high-quality businesses with durable or improving growth prospects that are benefiting from competitive advantages and are structured to achieve consistent profitability. He values strong balance sheets, proven track records, high returns on capital, and solid management teams whose interests are aligned with those of shareholders.
  • The stocks of U.S. companies represented roughly 75% of the fund's assets at the end of 2023, an overweight, Bower says, primarily because that is where he's found what he considers the best investment ideas.
  • "The U.S. economy has remained stronger than the rest of the world throughout the challenging dynamics of the past couple of years," Bower says, noting war in Ukraine and the Middle East, a pandemic and the global supply disruption it caused, and elevated inflation and rapidly rising interest rates in some markets.
  • One global industry in which Bower has strong conviction is semiconductor and semiconductor equipment manufacturing, given strong demand from end markets that he believes is likely to continue, regardless of the economic backdrop.
  • "These businesses are at the center of durable growth trends, including artificial intelligence, digital transformation, gaming software, the internet of things, electric vehicles, and the 'electrification of everything,' as well as smartphones, tablets, appliances, medical equipment/devices, and consumer wearables," he says.
  • The fund counts some leading names in this space among its top holdings as of December 31, including Nvidia, a U.S.-based maker of graphics semiconductors and networking solutions for AI, gaming systems, and enterprise workstation PCs.
  • "Nvidia is the exclusive producer of gaming processing chips, and I believe it is likely to be a key beneficiary of the growth of artificial intelligence for some time," Bower says. "The firm has impressive partnerships with other major companies and is well-positioned for long-term durable growth in any macroeconomic backdrop."
  • In other areas, Bower sees U.S. companies leading the way in facilitating the corporate world's transition to cloud infrastructure. Specifically, he's favored Microsoft and Amazon.com, two companies with compelling products in cloud and data center technology.
  • Microsoft's Azure cloud platform helps clients build, run, and manage applications across multiple clouds on their own premises, and it drives about half of the company's earnings, according to Bower. Meanwhile, he notes that Amazon Web Services offers a broad set of on-demand, cloud-based products and services to help corporate clients move faster, lower IT costs, and scale their business.
  • "Each company's cloud business has grown dramatically the past few years and notably contributed to their earnings growth," he says. "Looking ahead, I believe both firms will remain dominant players in this global industry for quite some time."
  • For specific fund information such as standard performance and holdings, please go to the "Funds Managed" link on this page.
 
 

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