Peter Lynch Avoids AI: Struggled to Say Nvidia Till 8 Months Ago

Published Date : 7/10/2025 

Legendary investor Peter Lynch, known for his market-beating returns at Fidelity Magellan Fund, shares his thoughts on the current AI boom and offers advice for the next generation of investors. 

Peter Lynch, a legendary investor who built a reputation for routinely beating the market while overseeing Fidelity Magellan Fund in the 1980s, has some advice for the next generation of investors. Despite the current boom in artificial intelligence (AI), Lynch has chosen to sit on the sidelines.

The artificial intelligence boom has dominated the market for the past three years, but Lynch, who averaged a 29.2% annual return in his 13 years at the helm of Magellan until 1990, has been content to watch from the sidelines.

“I have zero AI stocks,” Lynch said on “The Compound and Friends” podcast with investor Josh Brown. “I literally couldn’t pronounce Nvidia until about eight months ago.”

Lynch, who famously claimed that at one time 1 out of every 100 Americans had a stake in Fidelity Magellan, addressed his career, the lessons he's learned along the way, and, yes, today's craze for everything tied to artificial intelligence. Here are five of the biggest takeaways:

Sitting Out AI

Megacap tech stocks have skyrocketed since the introduction of ChatGPT in late 2022, leading many on Wall Street to question if the AI trade is reminiscent of the dot-com bubble in the late 1990s. When asked if investors have chased the AI trade too far, Lynch said he had “no idea.”

Lynch admitted he doesn't understand technology enough to have an informed opinion on the market's optimism toward AI. “I’m the lowest tech guy ever,” he said. “I can’t do anything with computers. I just have yellow pads.”

Lynch declined to discuss his current portfolio or the stocks he likes at the moment, citing rules from Fidelity.

Why You Don't 'Play the Market'

Lynch has long advocated that investors have a deep understanding of the companies they invest in. It's a core tenet of his book “One Up on Wall Street.”

“I have this expression: ‘Know what you own,’” Lynch said. “If you don’t understand what you own, you’re toast.” Lynch said people will spend hours researching flights to ensure they get the best price. But when it comes to investing, he said “they’ll put $10,000 in some crazy stock they heard on the bus.”

He described the phrase “play the market” as “awful” and “dangerous.” Instead, Lynch said people should buy good companies and have an awareness of what they do. Lynch noted that the average variation in a typical New York Stock Exchange security in any given year is 100%, so investors need to know what to do when big moves happen.

Entering After the First Inning

While the conventional wisdom is to buy stocks before they take off, Lynch cautioned against scorning all investment ideas just because a security has already rallied.

“Sometimes, you don’t have to be in the first inning,” Lynch said. As an example, Lynch pointed to McDonald’s, which he was told long ago had already seen rapid domestic growth. The hamburger chain went on to see strong growth when it expanded internationally.

“People said ‘McDonald’s is done,’” Lynch said. “They just simply didn’t think it through.”

Investment Advantages Today

Today’s investors have “cushions” that didn’t exist before the Great Depression and the New Deal, according to Lynch. Lynch named unemployment insurance, Social Security benefits, and the creation of the Securities and Exchange Commission as helping everyday people over time. He also highlighted the active role of the Federal Reserve in recent decades.

Investors today benefit from “so many things that are better,” Lynch said, noting more market and economic “buffers” than existed in the past. Lynch said investors have frequently braced for an economic collapse on the order of the 1930s. But none of the market tests since then, even the Global Financial Crisis in 2008-2009, have had the same downward intensity.

“We had many opportunities to have a ‘big one,’” Lynch said. “We’ve had some probably bad presidents, some bad congresses, we’ve had bad economists, and we’ve made it through.”

Future of Work

Lynch reassured workers who wonder if they will lose their jobs to AI. In the early 1980s, about one million people worked for AT&T alone at a time when the entire labor force stood at about 100 million. Even as the telecom sector has grown, Lynch said the leading companies today employ about 400,000 workers. Today, the U.S. workforce itself has swelled past 160 million jobs. Americans can probably count on expansion in some sectors to help offset elimination tied to technological advances or automation in others.

Lynch’s comments come as executives at companies ranging from Walmart to Accenture have warned that artificial intelligence will drastically reshape their workforces. “It’s a great country. We’re creative,” Lynch said. “America creates, China duplicates, and Europe legislates.” 

Frequently Asked Questions (FAQS): 

Q: What is Peter Lynch's stance on AI stocks?

A: Peter Lynch has zero AI stocks and admits he couldn't even pronounce Nvidia until about eight months ago. He prefers to sit on the sidelines due to his lack of understanding of technology.

Q: What is the core tenet of Peter Lynch's investment philosophy?

A: The core tenet of Peter Lynch's investment philosophy is to have a deep understanding of the companies you invest in. He emphasizes knowing what you own and being aware of what the company does.

Q: Why does Peter Lynch caution against 'playing the market'?

A: Peter Lynch describes 'playing the market' as 'awful' and 'dangerous.' He advises investors to buy good companies and understand what they do, rather than making impulsive investments in stocks they don't understand.

Q: What advantages do today's investors have according to Peter Lynch?

A: Today's investors have advantages like unemployment insurance, Social Security benefits, and the creation of the Securities and Exchange Commission, which provide more market and economic buffers than existed in the past.

Q: What does Peter Lynch say about the future of work and AI?

A: Peter Lynch reassures workers that while AI will reshape workforces, the U.S. economy is creative and can count on expansion in some sectors to offset job losses in others due to technological advances. 

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