Title: Investing in the Next Frontier of Artificial Intelligence: The Rise of Agentic AI

Artificial Intelligence (AI) has already revolutionized the digital world, transforming everything from customer service and content creation to targeted advertising and real-time recommendations. But a new paradigm is emerging—Agentic AI—poised to become the next transformative force in both technology and investing.

According to Priyanshu Bakshi, Portfolio Manager of the Fidelity® Select Communication Services Portfolio (FBMPX), we are still in the early innings of this seismic shift. And for savvy investors, this emerging evolution presents one of the most compelling opportunities in decades.

So what exactly is Agentic AI? Why does it matter? And more importantly, how can you position your portfolio to benefit from it?

What Is Agentic AI?

To understand the investment implications, let’s start with a definition.

Agentic AI represents the next stage in the evolution of artificial intelligence. Unlike traditional AI and even most current generative AI models—which require human prompts to produce content or make recommendations—Agentic AI is capable of making decisions and executing actions autonomously.

Think of the progression this way:

• Traditional AI: Analyzes data and provides recommendations.
• Generative AI: Creates new content based on inputs (e.g., ChatGPT generating a paragraph or an image from a prompt).
• Agentic AI: Plans, decides, and acts independently based on complex goals, adapting to changing conditions in real time.

Bakshi offers a compelling example: “An agentic AI assistant could organize an entire trip for a user—finding the optimal flight, booking the hotel, scheduling meals and museum visits—all while staying within budget and preferences, and adjusting dynamically if something changes.”

Now apply that same principle across industries like health care, manufacturing, customer service, software development, and finance, and the potential becomes transformative.

Why Agentic AI Is a Game-Changer

1. Productivity at Scale

Agentic AI could handle workflows end-to-end without human intervention, from processing customer orders to adjusting supply chains. This means unprecedented productivity gains in sectors that currently rely heavily on human input.

2. Faster Innovation

By automating complex problem-solving tasks and adapting in real time, agentic systems can dramatically accelerate product development and R&D cycles, particularly in fast-paced industries like pharmaceuticals, software, and semiconductors.

3. New Business Models

From personalized medical advisors to autonomous supply chain managers, Agentic AI could spawn entirely new services and business categories—creating room for early entrants to dominate emerging markets.

4. Improved Customer Experience

Whereas current AI offers personalization based on past behavior, Agentic AI anticipates needs and takes initiative. Imagine a customer service bot not just responding to complaints, but proactively fixing problems before the customer even notices.

Who Are the Key Players?

Meta Platforms (META) and Alphabet (GOOGL)

Bakshi identifies these two technology titans as leading the charge into the Agentic AI era, and their weight in his portfolio underscores that view: As of April 30, these companies made up a combined 42% of FBMPX’s net assets.

Meta Platforms (META)

Meta has made significant AI investments to boost its advertising efficiency, content moderation, and recommendation algorithms across Facebook, Instagram, and its growing metaverse ventures. Meta’s LLaMA (Large Language Model Meta AI) project is at the core of its agentic ambitions.

With billions of users and access to vast amounts of real-world behavioral data, Meta has a critical edge: the ability to train and deploy AI agents at massive scale, accelerating adoption and refinement.

Alphabet (GOOGL)

Alphabet is advancing agentic capabilities via Google DeepMind and its Gemini generative AI models, and integrating them into its core offerings—from Gmail and Google Docs to Search and YouTube.

Importantly, Alphabet already runs the infrastructure backbone (Google Cloud) capable of supporting global agentic systems. Its massive capital investments and access to real-time intent data (searches, maps, shopping behavior) give it unparalleled training grounds for autonomous decision-making AI.

How to Invest in the Agentic AI Megatrend

1. Target Foundational Innovators

As Bakshi does in FBMPX, consider allocating capital to firms building the infrastructure, data models, and deployment ecosystems for Agentic AI. This includes:

• Cloud platforms (e.g., Microsoft Azure, Google Cloud)
• Semiconductor leaders (e.g., NVIDIA, AMD)
• Enterprise AI tools (e.g., Palantir, ServiceNow)

These companies offer exposure not just to AI services, but to the underlying tools and chips required to run them—creating a double-layered growth opportunity.

2. Look for Secular Growth

Agentic AI is not just a flash in the pan. Bakshi emphasizes investing in companies with sustainable, long-term growth trajectories that are likely to exceed market expectations—not just ride hype cycles.

This means prioritizing firms with:

• Strong balance sheets
• Large addressable markets
• Scalable AI platforms
• Proven leadership in innovation

3. Understand the Risk-Reward Profile

While Agentic AI holds massive promise, it also carries risks—regulatory scrutiny, privacy concerns, and potential misuse. Be sure to diversify your portfolio and manage exposure appropriately. Consider ETFs that focus on next-gen technology or actively managed mutual funds like Fidelity Select Communication Services (FBMPX), which leverages professional oversight to stay nimble.

Agentic AI and the Broader Economy

The ripple effects of agentic AI will extend far beyond tech stocks.

• Consumer Discretionary: Personalized, automated experiences could boost e-commerce efficiency and consumer satisfaction.
• Health Care: AI agents could revolutionize diagnostics, personalized treatment planning, and administrative tasks—helping to curb costs and improve care.
• Industrials: Autonomous workflows in logistics, transportation, and manufacturing can reshape productivity curves.
• Finance: AI agents could serve as robo-advisors, fraud detectors, or compliance monitors, reshaping the landscape for traditional financial services.

Final Thoughts: Investing at the Edge of a New Era

Agentic AI represents a once-in-a-generation inflection point—comparable in scale to the internet, smartphones, or cloud computing. As AI evolves from a tool into a collaborator, the businesses that adapt first will shape the next decade of economic growth.

As Priyanshu Bakshi puts it, “We are still in the early innings of seeing the impact of this innovative technology, which I believe will take AI to another level.”

As investors, now is the time to:

• Educate yourself on emerging AI trends.
• Evaluate your portfolio’s exposure to AI leaders.
• Consider targeted or professionally managed vehicles like FBMPX to capture opportunities while managing volatility.

The AI revolution is evolving. The agentic era has begun. The question is—will your portfolio evolve with it?

Disclosures:

Past performance is no guarantee of future results. Investing in technology companies and emerging sectors carries risk, including loss of capital. Consider your financial goals, risk tolerance, and time horizon before investing. This blog post is intended for educational purposes only and does not constitute personalized investment advice.