Cathy Wood defended her company’s decision to bail out Nvidia before the chip maker’s stock surges 160%, saying the boom-bust cycle in the computer chip industry poses risks.
Wood’s flagship ARK Innovation ETF (ticker ARKK) cut its stake in Nvidia in January, missing most of the rally that added more than $5 trillion to its market cap. Nvidia expects revenue to hit $11 billion this quarter, 53% above analyst expectations, and jumped 24% on Thursday alone.
“When it comes to NVIDIA, there are several reasons why we’re pausing,” Wood said in an interview with Bloomberg TV. She said, “When you hear about shortages, shortages, shortages of things like GPUs, you start thinking about group periodicity.”
Wood cited companies like Tesla, Metaplatforms, and Alphabet, which are developing their own chips, as NVIDIA in the race to produce the chips that power the computing infrastructure behind artificial intelligence programs. said it also faces increasing competition.
Wood’s flagship fund sold its holdings to Nvidia, but some of the company’s “more specialized portfolios,” such as the ARK Next Generation Internet ETF (ARKW) and the ARK Fintech Innovation ETF (ARKF), are still owned by the company. maintains some exposure to
“I haven’t received much backlash,” she said of the decision to sell Nvidia, which she describes as a “checkbox stock.”
ARKK is up 25% year-to-date, beating the S&P 500’s 9.4% gain. The Nasdaq 100 index, which includes the super-large tech companies that drove the 2023 rally, is up more than 30%.
Nvidia is one of the main beneficiaries of the AI boom, with sales skyrocketing in response to demand for its chips. Marvel Technologies jumped 29% on Friday after it announced that revenue from its AI products would double this fiscal year. ARKK holds neither.
“We’re pivoting to another series of plays that most people haven’t discovered yet,” Wood said. “They just didn’t realize Nvidia was his AI space until recently.”
Wood said Meta’s AI-focused strategy was good, even though Meta isn’t part of the company’s main portfolio.
Meta’s LLaMA AI language model “can deliver better models” using less computing power and more data, she said.
“Meta is interesting for us,” she said, adding, “I like the fact that Mark Zuckerberg was really focused on the metaverse last year, and now he’s prioritizing artificial intelligence.” added.