As artificial intelligence has driven the market’s steep gain beginning in 2023, Fidelity Portfolio Manager Matt Fruhan says that identifying the eventual leaders comes down to staying flexible and grounded on valuation.
“I believe investors’ view of which companies will be the ‘winners’ and which will be left behind will constantly change, and that this will potentially create opportunities for me to buy stocks that I like, based on business fundamentals and my bottom-up research, at an attractive price,” says Fruhan, who manages Fidelity® Large Cap Stock Fund (FLCSX).
In helming the diversified domestic equity strategy since 2005, he has been guided by the belief that securities may become mispriced relative to their true long-term value when investors overreact to changes in short-term earnings estimates.
The fund’s outsized stakes (as of January 31, 2026) in two major AI players – Google parent Alphabet (GOOGL) and Instagram and Facebook parent Meta Platforms (META) – illustrate his approach to investing in AI, given evolving market sentiment about each.
In assessing Alphabet, Fruhan cites OpenAI’s late-2022 launch of ChatGPT. He explains that, at that time, many observers initially believed this technology could be a death knell for Google’s dominant search business.
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“Now, though, it seems clear that Alphabet has essentially caught up with OpenAI,” he says. “It has combined its own AI technology with Google’s core search function, and AI is now deeply integrated into Google’s offerings. At the same time, recent data suggests that the number of ChatGPT search queries has slowed.”
Meta has experienced essentially the opposite scenario, according to Fruhan, with investors’ view of the company shifting from optimism about its potential to benefit from AI to concern about the scale of its spending on the technology.
“Meta has been investing so heavily in AI that it’s suppressed the company’s earnings and cash flow, and as a result the stock price declined sharply for a few weeks beginning in late October,” he says. “I leveraged that temporary mismatch between Meta’s short-term valuation and the company’s longer-term earnings potential.”
Fruhan cites his approach to both Alphabet and Meta as good examples of his investment philosophy in action, which also supports how he evaluates other AI-related opportunities as he searches the broader market for strong businesses at compelling valuations.
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Matt Fruhan is a portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Fruhan manages Fidelity Advisor Capital Development Fund, Fidelity Series Growth & Income Fund, Fidelity Advisor Series Growth & Income Fund, Fidelity Growth & Income Portfolio, Fidelity Advisor Growth & Income Fund, and Fidelity VIP Growth & Income Portfolio. Additionally, he manages Fidelity Mega Cap Stock Fund, Fidelity Advisor Mega Cap Stock Fund, Fidelity Large Cap Stock Fund, and Fidelity Advisor Large Cap Fund. He also comanages Fidelity Equity-Income Strategy, a separately managed account (SMA).
Prior to assuming his current responsibilities, Mr. Fruhan managed Fidelity Advisor Financial Services Fund, VIP Financial Services Portfolio, and Select Financial Services Portfolio. Previously, he served as the industrials sector leader and managed Fidelity Advisor Industrials Fund, VIP Industrials Portfolio, and Select Industrials Portfolio. Prior to that, Mr. Fruhan managed Select Defense and Aerospace Portfolio, Select Air Transportation Portfolio, and Select Consumer Staples Portfolio. Additionally, Mr. Fruhan worked as an equity analyst following the food and supermarket industries, and in Fidelity’s High Yield Research department following the specialty retail, automotive supply, and transportation industries. He has been in the financial industry since joining Fidelity in 1995.
Mr. Fruhan earned his bachelor of arts degree, cum laude, in economics from Harvard College and his master of business administration degree from Harvard Business School.