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® Select Communication Services Portfolio (FBMPX). “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 (RBLX), 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.
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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 (TTWO), 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.”
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Priyanshu Bakshi is a sector leader and portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Bakshi is the sector leader of the global technology team. He covers internet platform stocks as well as Asia-Pacific mega-cap semiconductor and internet stocks. He manages Fidelity Select Communication Services Portfolio, Fidelity Advisor Communications Services Fund, and Fidelity VIP Communication Services Portfolio. As a member of Fidelity's Stock Selector Large Cap Group, he is also responsible for managing the communication services sleeves for various diversified sector-based portfolios. Additionally, he co-manages Fidelity Disruptive Communications ETF and Fidelity Disruptive Technology ETF.
Prior to joining Fidelity in 2015, Mr. Bakshi was a senior investment analyst at New Vernon Capital where he covered stocks in the small- and mid-cap space of emerging markets. He was also an assistant manager at Jones Lang LaSalle where his responsibilities included investment banking focused on the real estate sector. He has been in the financial industry since 2007.
Mr. Bakshi earned his Bachelor of Business Studies in finance from the University of Delhi and his Master of Business Administration in analytic finance and economics from the University of Chicago. He is also a CFA® charterholder.