Don’t Miss Out on These 10 Booming Stocks, Fidelity Says
Written by
Laura Beck
Edited by
Levi Leidy
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Industrial stocks have quietly become this year’s biggest winners, and most investors don’t even realize it. While everyone’s been talking about tech and artificial intelligence (AI), the companies that actually build the infrastructure for our economy have been crushing it.
Fidelity’s industrial fund managers said this sector is the top performer of 2025 so far, and they don’t think the party’s over. Here’s why these stocks are surging and which ones Fidelity is betting on.
Why Industrial Stocks Are Having Their Moment
Three major trends are driving industrial stocks higher, according to Fidelity’s research. First, some companies are bringing manufacturing back to the United States, which means more demand for factory equipment and construction services.
Second, the AI boom isn’t just about software. It also needs massive physical infrastructure. Every data center requires backup power systems, climate control and electrical equipment that industrial companies provide.
Third, aerospace and defense spending has ramped up significantly. This sector alone makes up about 25% of the industrials category and has jumped 32% this year.
Clayton Pfannenstiel, who manages Fidelity’s Select Industrials Portfolio, said industrial companies have an inside position on the biggest economic trends happening right now.
The AI Infrastructure Play Most People Miss
When people think about AI investing, they usually focus on chip companies like Nvidia. But Pfannenstiel said the real money might be in the companies that build what AI needs to function.
“Building a data center requires industrial assets such as a reliable source of backup power, advanced climate-control systems and substantial electrical equipment,” he explained.
This creates huge demand for companies that most people have never heard of but that are essential to making AI work in the real world.
Fidelity’s Top Industrial Stock Picks
Based on Fidelity’s Select Industrials Portfolio holdings, here are the companies the fund manager is most confident about:
GE Aerospace makes up 7.7% of the portfolio and has benefited from the recovery in air travel. The company builds jet engines and aircraft systems, and airlines are finally replacing planes they delayed buying during the pandemic.
GE Vernova represents 7.6% of holdings and focuses on power generation equipment. As data centers and industrial facilities need more electricity, Vernova’s turbines and power systems become more valuable.
Howmet Aerospace takes up 6% of the fund and specializes in advanced materials for aircraft and industrial applications. The company has been winning market share in both commercial aviation and defense contracts.
Boeing remains a 4.2% holding despite its recent challenges. Fidelity appears to be betting on the company’s long-term recovery as air travel demand continues growing globally.
Deere rounds out the top five at 3.1% of the portfolio. The farm equipment giant has been investing heavily in automated farming technology, positioning itself for the future of agriculture.
Other significant holdings include:
- Parker-Hannifin (4.0%) — motion and control systems
- Eaton (3.95%) — electrical equipment and power management
- Trane Technologies (3.93%) — climate control systems
- TransDigm (3.2%) — aerospace components
- Ingersoll Rand (3.1%) — industrial equipment
The Factory Automation Advantage
Pfannenstiel highlighted factory automation as a major opportunity that most investors are missing. As companies bring manufacturing back to the U.S., they’re using robots and automated systems to manage higher labor costs.
This creates demand for companies that make industrial robots, automated assembly systems and the software that runs modern factories.
Even Government Is Getting Automated
One surprising area Fidelity is watching is how AI helps government workers become more efficient. Pfannenstiel shared that police departments are using AI to reduce paperwork time and translation services in the field.
Companies like Axon Enterprise, which makes police body cameras and other law enforcement technology, are expanding into AI-powered tools that could transform how public services work.
Why This Rally Might Continue
Fidelity warned that industrial companies are sensitive to economic downturns since their customers often delay big equipment purchases when times get tough. Despite these risks, they see several reasons why industrial stocks could keep climbing. The trends driving this sector like AI infrastructure and manufacturing reshoring likely have staying power.
Construction and engineering companies have huge backlogs of projects because businesses are building new factories and data centers. Aerospace companies are working through years of aircraft orders as airlines replace older planes.
The shift toward factory automation isn’t a short-term trend either. As labor costs rise and companies want more control over their supply chains, automated manufacturing becomes more attractive.
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