With investors crowding around a group of high-flying artificial-intelligence-related stocks, Fidelity Portfolio Manager Bill Bower sees opportunity in other international companies with attractive durable-growth potential at a compelling valuation.
“I believe such underappreciated stocks could be advantageous to Fidelity® Diversified International Fund (FDIVX) in a market with broader stock participation,” says Bower, longtime steward of the broadly diversified international equity strategy. “I’m not just looking for cheap stocks. I want to invest in companies with a differentiated product or other catalyst that could help grow earnings and cash flow over an extended horizon.”
As manager of the fund since 2001, Bower emphasizes high-quality businesses with durable or improving growth prospects that are supported by competitive advantages and are structured for consistent profitability.
The emergence of AI has been front and center for Bower, with the fund benefiting from exposure to a variety of related names, but recently he has pared some of them when they have reached a valuation that is inconsistent with his approach to risk management, prudently redeploying that capital to other growth companies that he thinks have been overlooked.
“These new fund investments may not deliver the outsized gains seen in some AI-related companies over the past couple of years,” Bower says, “but I believe they can help me minimize downside capture if the markets stumble, given their more appealing valuation.”
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Within the financials sector – which represented more than 27% of the fund’s assets at the end of January – Bower established a position in U.K.- and Hong Kong-based Prudential and meaningfully increased exposure to Hong Kong-headquartered AIA Group. Both provide insurance, annuities and wealth management services in Southeast Asia. The stocks had derated significantly amid weakness in the local securities market, he says.
“Southeast Asia is still highly underpenetrated with regard to the insurance and asset-management services these companies provide,” Bower contends. “The population there has a per capita annual income of about $10,000. The region’s population is growing, and over time, as income grows, I believe these undervalued businesses are well-positioned for higher sales and earnings growth in the next three to five years.”
Elsewhere, Bower has identified attractive opportunities in the semiconductor industry, favoring names such as Renesas Electronics, a Japanese maker of chips for autos, refrigerators and other industrial applications.
“The stock got incredibly cheap relative to its historical valuation due to depressed business fundamentals, as demand for new cars and appliances slowed in 2025,” he says. “Still, the company has grown earnings and generated cash flow, and as the global economy recovers, I believe sales for the end markets Renesas serves are likely to recover.”
He contends, “I see Renesas as sort of like a ‘coiled spring’ that may expand at some point, and I’m willing to be patient until that hopefully happens.”
For specific fund information, including full holdings, please click on the fund trading symbol above. Securities mentioned were fund investments as of January 31, 2026.
Bill Bower is a portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Bower manages Fidelity and Fidelity Advisor Diversified International Fund and Fidelity Advisor Global Capital Appreciation Fund.
Prior to assuming his current responsibilities, Mr. Bower managed various other Fidelity funds, including Fidelity International Discovery Fund and Fidelity Select Construction and Housing Portfolio. He also co-managed Fidelity Overseas Fund.
Before joining Fidelity in 1993, Mr. Bower was a commercial real estate loan officer at Michigan National Bank. He has been in the financial industry since 1989.
Mr. Bower earned his bachelor of science degree from Western Michigan University and his master of business administration degree from the University of Michigan.