- ARKK
- NVDA
Cathie Wood has made a name for herself by going all-in on tech, whether it was software stocks when they were novel, cryptocurrencies, or now artificial intelligence (AI) stocks. Her firm, Ark Invest, runs several exchange-traded funds (ETFs) that give investors access to baskets of tech and AI stocks managed by her and her team.
The largest Ark ETF is called the ARK Innovation ETF (NYSEMKT: ARKK), which had roughly $6.42 billion in assets under management as of Aug. 25. Wood and her team invested roughly $1.4 billion of this capital in just three AI-related stocks. Let’s find out a bit more about these three Wood-favored stocks.
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1. Tesla: $594.8 million
Wood and her team have long been bullish on Tesla(NASDAQ: TSLA), from its days operating primarily as an electric vehicle company to its current focus on its emerging robotaxi fleet and humanoid robots. ARK Innovation ETF’s position in Tesla amounted to nearly $595 million as of this writing, or 9.26% of the fund.
While it’s a bit stale at this point, Ark published a deep dive on Tesla in June 2024, assigning the stock a monster $2,600 price target in its base case for 2029, implying more than a sevenfold increase from current levels.
Much of the bullishness is based on robotaxis. By 2029, Wood and her team believe the robotaxi business will make up 63% of Ark Invest’s projected $1.2 trillion of revenue for the company that year; 86% of the projected $440 billion earnings before interest, taxes, depreciation, and amortization (EBITDA); and 88% of the $8.2 trillion enterprise value. That also implies a 37% EBITDA margin.
Tesla launched robotaxis in seven markets as of late July. Management also reported on the second-quarter earnings call that unsupervised robotaxis have now driven 380,000 miles.
Still, the fleet is scaling slowly and cautiously to focus on safety, and even Tesla CEO Elon Musk noted on the earnings call that robotaxis need cellular coverage everywhere. There is also plenty of competition in the space now.
While Tesla very well could succeed with robotaxis and humanoid robots down the line, I’m still cautious on the stock while it trades at close to 198 times forward earnings.
2. Tempus AI: $401.7 million
ARK Innovation’s second-largest position, accounting for 6.25% of the fund, is class A shares of Tempus AI (NASDAQ: TEM).
