Cathie Wood is known for two things: bold investment moves to compete with the crowd and focus on the long term. This means Wood could sell a popular stock that soared and bought stocks in recent stocks. The CEO of ARK Invest does this to attract innovators (her favorite company) at a reasonable price. She doesn't mind whether stocks struggle in the short term, as her goal is to stick to the company in her portfolio as she grows up.
Just this week, Wood did it completely, a move involving three artificial intelligence (AI) stocks. The technology is expected to revolutionize the way the world works, and AI stock is the alley of Wood, which could represent billions of dollars in revenue from leading companies. This week, Wood cut one of her favorite stocks — a surge of 1,000% in three years — and added her position on two other AI Giants. Let's take a closer look at her actions.
So let's start with the wood for sale. This week, at multiple trading meetings, the wood was sold Palantir Technology (NASDAQ: PLTR)the manufacturer of AI-driven software systems. As of May 9, the stock was the sixth largest stake with a weight of 6% Ark Innovation Exchange-traded funds (ETFs).
Palantir reported excellent revenue growth earlier this week and maintained a solid balance of growth and profitability, with the company highlighting the power of demand moving forward. So there is no bad news in the report, but as a large holder of Palantir, Wood may decide to lock in some profits to redistribute them to other opportunities. Most importantly, Palantir's stock is now expensive, about 200 times the forward earnings, which may make the recent stock's performance pay attention to.
Nevertheless, it is clear that in Palantir's important position in Ark Innovation, Wood remains optimistic about the company's long-term prospects from revenue and stock performance, even after stocks climbed four times the figures over the past three years.
Now, let's consider Wood's purchase. Top investors add more shares of AI chip designers Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) Ark Innovations have been carried out in the past week. Given the valuation of these players, it’s no surprise that the bargaining wood is. NVIDIA's transaction is estimated at 26 times, down from 50 times earlier this year. AMD's valuation decline is not that spectacular, but today's stock value is still a good value, estimated at 25 times, compared to more than 30 times a few months ago.
NVIDIA dominated the AI chip market and its pace of rapid innovation should remain the leading position. So anyone who believes in an AI growth story, like Wood, may currently view Nvidia as a stable purchase. The company proves itself by generating record revenue and sales profitability in recent quarters, and Nvidia has laid a positive product development roadmap.
Meanwhile, AMD has also made progress in the AI chip market, and the industry has plenty of room for the player to succeed without making NVIDIA. AMD CEO Lisa Su said in a recent earnings report that the company "opened an excellent starting point to 2025". Revenue and gross profit both climbed in double digits, with AMD announcing gross margin of 50%, indicating that sales are profitable. This growth is driven by AMD's advantages in central processing units (CPUs) (the main processor in standard computers) and the AI advantages of data center customers.
So, what is the latest move by superstar investor Cathie Wood for you as an investor? These three AI giants are Stocks owned long. But from a valuation point of view, NVIDIA and AMD of these three are now the best buying opportunities available. Given the pace of AI growth, they may not maintain these valuations for a long time, so Wood took the opportunity to increase her stake - other savvy AI investors might want to do the same.
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Adria Cimino has no position in any of the stocks mentioned. Motley Fool has a location and recommends advanced micro-equipment, Nvidia and Palantir Technologies. Motley Fool has a disclosure policy.
Cathie Wood