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  • 2 years ago
On this episode of The Raz Report, Benzinga CEO Jason Raznick sits down with Cathie Wood to discuss her ARK fund, AI stocks, what she thinks about Bitcoin, and much more.

Cathie Wood famously called Tesla's stock incredible move, and is massively bullish on Bitcoin with a $1 million-per-coin price target. Tune in to this special edition of the Raz Report for Cathie's call on Bitcoin, Tesla, Nvidia and more.

Cathie also outlines her favorite AI stocks, gives her views on inflation and what could be even worse for the economy. Visit RazReport.com for more podcasts with investors, entrepreneurs, financial analysts and industry leaders.
Transcript
00:00 private, no government oversight, digital, rules-based monetary system the world has ever known.
00:06 That's a big idea. We were in NVIDIA, have been, still are in the more specialized portfolio at a
00:12 lower percentage. We're on to the next big beneficiaries of artificial intelligence.
00:18 I think what we're seeing, certain breakthroughs in our AI itself are taking Tesla closer to its
00:25 goal with proprietary data and domain expertise in their own business, as well as AI expertise,
00:33 can become more competitive in its own industry. We think the bigger risk out there is not inflation,
00:41 it is deflation. Hi, my name is Jason Raznick, the CEO of Benzinga, and welcome to the Raz Report.
00:47 As always, before we kick things off, I want to quickly tell you about what Benzinga is.
00:52 Before I started Benzinga in 2010, there were very few places to get real-time information
00:57 on financial markets. I thought it was unfair that Wall Street had access to this information
01:01 before the average Joe investor. So I created Benzinga to level the playing field for you,
01:06 the retail investor. Benzinga is for the people and by the people. Now let's dive into the show.
01:12 All right, very excited to bring back a past guest onto the Raz Report. We have none other
01:19 than ARK Invest's Kathy Wood. You know her, you know her analysis, her data, her team's research.
01:26 She has grown her firm. This was two, three years ago. Back then I was a lot less gray,
01:31 had a lot less gray hair. Interest rates were a lot lower. Gross stocks were growing faster,
01:38 interest rates are a lot higher. Gross stocks are growing slower, it seems like. I have more
01:43 gray hair. Kathy, welcome to the Raz Report. Thank you, Jason. I'm happy to be with you again.
01:49 Thank you. Thank you for coming on again. We appreciate it. I had a lot of fans last time
01:53 and I've got thousands of questions sent to me again. This time we're going to do our best to
01:57 try to get 20 questions in. We'll see. Has your overall strategy changed, Kathy, with these higher
02:04 interest rates that we're in right now? And I'm jumping right into it. We're not doing the whole
02:08 interest stuff. Oh yeah. So we have a very strong point of view about what's going to happen to
02:14 interest rates. We think they're going to fall and surprisingly so, because we think the bigger
02:21 risk out there is not inflation. It is deflation. And you can tell me, "Oh, these economic statistics
02:30 are saying the economy is fine." You take a look at some of these earnings reports and the headline
02:36 will be, "Oh, they beat their revenue and earnings." But what happens if you look deep into it?
02:41 The guidance has been falling for a long time and many companies are showing little to no nominal
02:47 growth. So forget about inflation. Nominal revenue growth is diminishing. And by some measures,
02:54 real revenue growth has been negative in units terms for the last two quarters on a year over
03:00 year basis. So do you think then, some people are skeptical on the economy, what it's going to do.
03:10 Do you think people are right to be skeptical? Because so far, the government's looking at
03:14 inflation, they still see inflation. You think the government's wrong on that or where are we at on
03:19 that? Well, I think we've dropped inflation from 9% in June of '22 to 3%, a little over 3%
03:28 headline CPI in July of this year. So it's coming down and money growth is negative on a year over
03:38 year basis, down more than 3%. It's been negative since the beginning of the year. And monetary
03:46 policy operates on the economy with a lag. So we actually think there's going to be a harder
03:51 landing than most people think. And certainly when it comes to profit margins, now that all
03:57 of these companies are agreeing to these huge wage bills. Yeah. And so then deflation to you,
04:06 does that happen on statistical numbers from the government or is that stuff that you guys
04:11 see in your own data? I think it ultimately will happen to the government numbers. There's big lag
04:18 there. There's a good story from Domino's, the CEO of Domino's Pizza. He said, we made a bad mistake
04:26 in trying to raise prices. We're rolling them back. We lost units. We're rolling them back now.
04:32 And I think the consumer is saying, no more, we can't take it. Savings are running down.
04:40 Student loans are coming back. And companies are going to rethink their strategy to see P&G
04:46 and Pepsi, near double digit price increases and negative units. Well, these are manufacturing
04:54 companies that kills productivity and it becomes a vicious cycle. Got it. So then when you,
05:01 because one of the things that I see like credit card debt, they say is the highest it's ever been,
05:06 but is it the highest ever been in terms of the whole market or is it low versus that? Or
05:11 like, is that a big concern credit card debt for your team? Well, credit card debt is not a problem
05:18 until delinquencies start ramping and delinquencies ramp when unemployment goes up. And we do think
05:25 unemployment is going to go up as companies watch their margins going down. They've held up because
05:33 they've priced to keep their margins up. They've put in through higher prices, but now they're
05:39 losing unit growth. We just got a report today about consumer delinquencies
05:45 ramping much faster than some company had expected. It was a retailer, I believe.
05:54 I think you're going to, this is going to become pretty rampant. Okay. Got it. Got it. All right.
05:59 Now we're switching to AI. I know you are a fan of AI before anyone talked about chat GPT.
06:07 So like, again, you, you don't get credit sometimes where credits do. And then, you know,
06:14 like we'll talk about Tesla later, but then everyone talks about AI and it's like, okay.
06:18 So then they're like, Oh, she sold this stock too quickly. NVIDIA. Yeah. NVIDIA. NVIDIA. Do you
06:24 think it's too late for investors to get into AI stocks? No, but I think every stock could become
06:31 an AI stock because that's a bit of an exaggeration. Commodity stocks won't, but any company
06:38 with proprietary data and domain expertise in their own business, as well as AI expertise,
06:48 learning how to harness that data and combine it with foundation models can become more competitive
06:56 in its own industry. So, you know, we, for every dollar in hardware that artificial intelligence
07:05 causes to be spent, there will be somewhere between eight and $21 in software. Twilio is having
07:14 its AI day today called Signal. And it's talking about all of the ways it is harnessing AI. It had
07:22 Sam Altman on the, on the during the day. Stage. Yeah. On the stage. And so Twilio has more than
07:32 a trillion engagements between consumers and businesses recorded every year and growing.
07:40 So it has data and it's all about marketing. How can we use this data to market to this individual
07:47 more effectively, which is what companies want. So they want, they want the Twilio to have access
07:55 to this data so that they can help them. Is Twilio one of the positions you guys
07:59 have been building up? Yes, we have. It is just to give you a sense of the drama here.
08:06 Nvidia is selling at about 25 times this year's revenue. Okay. 25. Twilio is selling at two and a
08:15 half times this year's revenue. And so software company with margins that are going to rise
08:22 as it integrates more AI into its businesses. So absolutely. And Twilio is profitable, right?
08:31 It is just moving into cashflow profitability, surprising analysts. The markets actually
08:39 demanded that most of our companies move much closer to profitability than they were a couple
08:45 of years ago. So that's what they've done. And now they've got AI as a tailwind. So it's,
08:52 we think it's going to be a fabulous story. And I actually think if Twilio wanted to be
08:57 a lot more profitable, it could be by cutting R&D expenses. Twilio founder, Jeff Lawson,
09:02 is a fellow middle school, high school classmate of mine. He was one year older and his mom was
09:09 my math tutor. When I didn't study for the math test, I'd go to Jeff's house and get my pre,
09:13 my calculus tutor the day before. But Jeff Lawson is from Michigan as well. So yes, he's an amazing
09:21 CEO. Have you met him yet? Have you talked to him? Yes. Oh, yes. Yes. And it was very interesting to
09:26 see his transformation. I think he thought early on that AI was going to be, you know, building out
09:34 AI models was going to be way too expensive that they'd have to leverage off of others. Now the AI
09:40 training costs are dropping 70% per year. So now he is harnessing AI in an aggressive way,
09:48 which we think is really important. You need a visionary leader, proprietary data, domain
09:52 expertise and AI expertise to harness this data. And I'll tell you, he was a visionary leader way
09:59 back in college, started a company, Versity. It was note taking for college classes way before
10:05 anyone ever talked about it. He was always on the cutting edge. So you have a good leader in him.
10:10 Okay. So, and yeah, and I'm friends with him. Yeah, he's on the phone. I'll text him after and
10:17 said, we talked about him and send him the clip, but. He's doing a good job on Signal today. I
10:22 watched his interview with Sam Altman. All right. I'll tell him that. I will relay that. So in a
10:27 report from you guys, you laid out an investment case for UiPath and Trilio's good AI investments
10:33 with lower price to sales. We talked about Trilio. What about UiPath? So UiPath is in the
10:40 robotic process automation space. And I remember when it went public, I thought, wow, you know,
10:48 he's right. He's able to bring together individuals from different companies who are business process
10:56 oriented and trying to help make their companies more efficient. And they compared best practices.
11:04 UiPath put these best practices to work and now is building foundation models and other models
11:12 to help companies with their workflows. This is the boring stuff. It's the administrative stuff,
11:18 but it makes a huge difference. By our calculations, knowledge workers are paid $32 trillion
11:25 around the world. We think that could be cut in half because of efficiencies in those specific
11:32 jobs. Technology is a net job creator. There will be other new jobs created that we cannot
11:39 even imagine now thanks to artificial intelligence. Yeah, it is truly unbelievable. I mean,
11:44 I hate to see how many more emails you're probably receiving from people that are, you know, trying
11:48 to get a job with you, but you don't know if they're using AI to do it. Because back in my day,
11:52 when I had to write a letter to try to get a job at a hedge fund, I would spend a couple hours,
11:57 few hours. I remember Bill Ackman. Every word, oh, how is this going to sound? Yes, I remember.
12:04 And you did the same thing. In our last interview, which you can go check in the Razzle Report,
12:09 we talked about how Kathy got her start. So I usually go to there, but we have that.
12:13 And every word, those emails now, Kathy, I don't know how you know if it's AI or not, right?
12:18 Yeah. You know, I think that many of them seem like form letters and we kind of recognize form
12:27 letters. We're doing an interesting thing with chat GPT. Our analysts, you know, I think we need
12:35 a certain voice and we need to speak to the young, from the youngest investors to the most seasoned
12:42 investors. So there's a certain voice we have when it comes to editing. And all of our analysts are
12:47 now writing with saying something like, okay, please translate this chat GPT into grammar and
12:55 a writing style like Kathy would. That's a bit of an exaggeration, but it's working because, you know,
13:04 I won't let anything go up on our site unless I edit it. You know, the important blogs, I'm talking
13:10 more about on the research side. And so it's a big help to us in terms of making very difficult
13:19 concepts clearer. Chat GPT is very good at doing that. A hundred percent. And then there's all
13:26 these other ones that do a little version of it. We use a different one and it's pretty good on
13:32 the editorial side. I'll share that with you off the line. I think you'll like, yes, we've tested,
13:36 we had a whole team test it and there's another one that I'll share with you offline because it
13:40 was a decent amount of research. Okay. All right. So yeah, I'll follow up with you on email or text
13:45 on that. All right. So we're going to move on to Tesla for a second. So Kathy would predicted that
13:52 Tesla would reach a market cap of 500 billion by 2024, but it actually achieved that milestone in
13:58 2020 and surpassed 700 billion in 2021. One of the biggest catalysts I know that you see for Tesla's
14:07 FSD before that, we've got the, you know, the highly anticipated cyber truck, which I would
14:13 love to be in line for. Ilana, if you're listening and you get me in the front of that line somehow,
14:17 okay. But anyway, how big of a catalyst do you think cyber truck is for Tesla?
14:22 Well, we think cyber truck is going to expand the truck market. Just like the model three
14:30 has expanded its category. You see in the model three, you've seen people who they've stretched
14:39 to buy that car because it's such a good car. Now it will be interesting. The F-150 Lightning,
14:46 the Ford electric truck, seems to be preferred by people within the Midwest, but you see that
14:56 GM and Ford are both signing on to Tesla's charging network. We think that the middle of
15:04 the country, which has not really embraced Tesla's cars, is probably going to be much more amenable
15:12 when there are chargers much closer by. And I'll bet the same thing happens with the cyber truck,
15:18 especially we're hearing a lot of funny stories about, they're funny, but they're also very,
15:26 I'm sure for the people experiencing, I heard one story, an F-150 Lightning truck owner driving his
15:35 family on a long distance. He said, "We were hungry, afraid, and heartbroken because there
15:43 were no charging stations." And so we think that's a big deal when it comes to the middle America
15:49 adopting any EV, but a cyber truck. Yeah, that is a huge deal. So then my question to you is,
16:00 with these other companies adopting Tesla's charging network, does fast charging then
16:06 work for those companies and it doesn't help Tesla as a differentiator as much? Or are they
16:12 getting a lot of royalties for them using their things? I don't know. Well, they're probably
16:16 getting a lot of information. This is an information network as well. And so about
16:23 cars coming and going. So I think, I'm not sure what the licensing deals are like, we don't know,
16:31 but we do know that Tesla will get a lot of information, which is really important in this
16:37 digital age. So what are the implications? Supposedly the automated driving is coming out,
16:48 the word beta, FSD update version 12 will no longer be called beta. I don't know if you saw
16:54 that, but if you did, implications of this? Yes. Well, if you received the last software upgrade,
17:03 you'll see how much full self-driving has improved, FSD has improved. And so I think what
17:12 we're seeing certain breakthroughs in AI itself, artificial intelligence, are taking Tesla closer
17:20 to its goal than I think many people expected. Of course, Elon expected it three years ago.
17:28 And we're learning only now that he needed large language models to accomplish this last mile,
17:38 so to speak. So yeah, I think it's going to be pretty much there. And we already know
17:44 from the data that they're providing that driving in a Tesla car with FSD as it is right now,
17:52 and all of the other safety features, causes accidents once every 3.2 million miles.
18:02 And so if you compare that to Tesla's pre-FSD, that is five times improvement. And that also
18:15 compares to 500,000 for the average car out there. So six times safer than the average car out there.
18:24 It's unbelievable. I know you, I think you had a Model 3. When we met in person, I don't know
18:30 if you remember here in Detroit, I had a Tesla and I was going to drive you guys to the airport.
18:36 And so I had one early, and now I have a different electric car, which is like a premium brand,
18:44 but I am in the process of getting a different S and selling that premium brand electric car
18:51 that I bought at a high of the market. But because of some of the safety features that Tesla offers
18:57 and just other things like making it so easy to put air conditioning in your car before you get
19:01 in the car versus having to do with other things that are just not as easy. It's amazing. The thing
19:09 that I want to see with Tesla is some sort of like network effect where the cars somehow,
19:15 more cars, the more network effects. And I know that taxi system is one of those things. Is the
19:21 taxi system still one of your big catalysts for the stock eventually? Absolutely. And we think,
19:29 we see cruise automation. It took cruise automation nine years to get San Francisco right.
19:36 And now people are, of course, concerned that it didn't get it right given some of the accidents
19:42 we've seen recently. So that was nine years then, but it only took them three months, so 90 days
19:51 to figure Austin out. And now I think if I'm not mistaken, it's gone to either Charlotte or
19:56 Charleston. So it is now starting to make its way throughout the country. And I kind of like that.
20:04 I'm sure it's motivating Elon even more. We do know recently that they put up a job description
20:11 for someone who might start them out in the ride hailing space with passengers. So getting the
20:21 network started city by city. So we'll see what pans out here. They said they wouldn't do that,
20:29 but apparently there was a job description recently. So we know they're thinking,
20:34 how do we go national and how do we do this big and all at once? Yeah, no, absolutely. So two
20:41 more questions just on Tesla. What do you, this Chinese thing, Tesla slashing prices in China,
20:46 is there increased competition? How does the China thing work out for Tesla? Yeah. Well,
20:55 we know that Tesla cuts prices because it can. It is riding down a learning curve. And according to
21:04 Wright's law, this is drive train technology, Tesla style for every cumulative doubling in the
21:12 number of units produced, cost declined 28%. And of course, as they move to different chemistries
21:19 like lithium iron phosphate, those costs drop even more dramatically and they're doing that in China.
21:28 So I think they're catering to that market. It is weakening as a market. There is more competition.
21:35 And I think they're pretty confident though about their positioning. Because if you've seen
21:43 the other Chinese manufacturers, except for BYD, they have really hit the skids. Now,
21:50 we're seeing some better numbers in here, but Tesla seems to be the preferred vehicle along
22:01 with BYD. BYD, many of its vehicles are less expensive. Okay. And you guys, when we're talking
22:09 to Cathy about Tesla, this is someone that lives, breathes, looks at Tesla like none of us, I mean,
22:16 some of us probably do. But before we went on the air, I was talking about Logan and Jake Paul.
22:20 She never heard of them, which I just find amazing because it just shows focus in the sense of she
22:26 focuses on what she studies. She has Archer Innovation, all these different plays that have
22:32 been successful and ahead of the game and looking at the future before the future comes. I mean,
22:38 that's what Cathy does. And when I was talking about a pop culture thing, she didn't know. And
22:42 I just find that awesome because it just shows you how deep you go. Logan and Jake Paul,
22:47 and there was something else. But it shows you're not wasting your time looking at, I don't know,
22:54 TMZ. Yeah. Well, thank you for letting me off the hook. And it really is, yes, we eat, breathe,
23:00 drink our research on all kinds of companies. And it is us. It's our analysts. In the case of
23:09 Tesla, Toshikini, especially on the autonomous side, and Sam Koras on the electric vehicle side
23:17 have been amazing in helping us surface how important this company was going to become,
23:24 as well as Brett Winton, our chief futurist. So got to give them all due credit.
23:29 So the last question on Tesla is from one of our writers, Chris Kaji. He said,
23:33 how should investors think of Tesla when thinking evaluation with electric vehicles, energy storage,
23:39 solar, autonomous robots, and much more? Why should it trade more like a tech stock
23:44 than an auto stock? Thank you, Chris, for that question.
23:46 Well, so he's suggesting it should trade like a tech stock.
23:52 Yeah, he's saying with, you know, they have electric vehicles, energy storage, solar,
23:56 autonomous robots, and much more. Some people, maybe bears in the market, think it should trade
24:00 more like an auto stock. And he thinks- That's why they're getting it wrong.
24:03 That's why they're getting it wrong. So to go back to our AI conversation just a little while ago,
24:10 we believe that autonomous taxi platforms are the biggest AI project in the world.
24:19 And we believe that Tesla, because of its positioning with AI, it is the only auto
24:27 company or tech company that has designed its own chip for autonomous driving. It has taken a leaf
24:34 from Apple's book. Apple redefined the cell phone market by designing a chip that turned the cell
24:42 phone into a computer. And look where Motorola, Nokia, Ericsson, BlackBerry are today. They didn't
24:52 define the market correctly, and neither have auto companies. This is not an auto play. This is an
25:01 autonomous taxi platform play with software as a service like margins, which means on that part of
25:09 the business, the autonomous, those are 80% plus gross margins. And anyone following Tesla now
25:17 knows that its margins are in the 20s normalized when it's not cutting prices dramatically
25:28 in order to compensate for a weak environment. Can't you get Elon to cut the price of the
25:34 plaid just a little? He introduced that standard Tesla, 10,000 lower, cut the plaid. I mean,
25:39 he shouldn't have to because it goes faster than any $300,000 Ferrari or Lamborghini. I mean,
25:45 it's unbelievable. 1.99 seconds. Yes. I have a story there. One of my dear friend's
25:53 sons got a Model 3. Something went wrong with the Model 3. So he tried, for some reason, he got a
26:03 plaid. This is a guy in college. And it is, I mean, he wants to, he loves it in a sense, but it's
26:13 also scary. It's also scary. It's a race car. And I think that was a big mistake, but it's unbelievable.
26:23 Well, if he wants to, I'll get the plaid. We can do an exchange. But yes, connect us. I'll connect
26:31 you in that other thing. Okay. Archer Innovation, this guy, Piero, it's up 290% this year, but it's
26:38 a really small holding in your fund. Are you guys planning to increase exposure to the air taxi
26:42 industry? Yes. Yes. We think the air taxi industry is almost here, thanks to, and it's the same
26:50 things we were just talking about. It's battery technology, artificial intelligence. And we have
27:00 another consideration, regulation, as do autonomous taxi platforms. So yeah, we started buying Archer,
27:11 to be truth be told, we wrote it all the way down and we kept buying it. Now this is in ARKQ,
27:19 which is our autonomous technology and robotics fund. And so you can see that, and we're now
27:27 writing it up and we put it into our flagship fund, just 50 basis points, as they were doing
27:36 the most recent deal. And then they announced that they had settled with Boeing. And not only
27:42 have they settled with Boeing, there was a nasty lawsuit going on over there about patents. But
27:51 Boeing has taken an ownership position in Archer and Archer has two other partners, United Airlines
27:58 and Stellantis. So Stellantis is thinking about autonomous mobility. Stellantis, as you know,
28:06 owns Chrysler, an Italian company that bought Chrysler. So it seems to us that Stellantis,
28:16 more than the other auto manufacturers, is thinking about mobility in another way or in
28:22 an expanded way. And that is this autonomous taxi, I mean, eVTOL, air taxi. So we're pretty excited
28:32 about that because those are deep pockets and this is a high fixed cost business, longer term.
28:38 So we think there's going to be some nice scaling with those partners.
28:43 Okay. So like you could be making more purchases of that industry.
28:49 Oh, yes, yes, yes. Well, in ARKQ, we also own Joby.
28:55 Yes.
28:57 Okay. So that's another one. And then I didn't ask this, but I know last time you had to sell
29:03 Tesla shares back when the stock was going crazy because of the weight in your portfolio. Some
29:08 people wrote in, I see ARKQ selling some Tesla shares. Does that have anything to do with your
29:14 prediction on the price of the stock or balancing or any answer to that?
29:19 Well, we are in print. Our price target for 2027 is 2000. That's what we're in print on.
29:29 But our confidence in autonomous has gone up. So you can conclude what you want with that. So that
29:36 2000 compared to I guess we're around 250 now in and around 250. Our confidence is pretty high on
29:44 that, increasingly so since we've seen the software upgrades, how provocatively they have improved
29:52 FSD. So no, not at all because of the price target. When we move into a situation, take
30:03 Archer. And to be honest, I can't remember exactly if we use some Tesla for it,
30:08 but this is in the autonomous mobility space as well. Our compound annual rate of return
30:14 expectation for Archer is actually higher than that for Tesla. And as you can tell for Tesla,
30:21 it's pretty high. But Archer is also much more speculative. It's much earlier stage.
30:29 Nonetheless, when we get an opportunity and see significant liquidity, we'll source liquidity
30:37 from another stock that has had a good run itself. Got it. So that's like, I get it. It's
30:44 what you do as a portfolio manager. And what's beautiful about what you do is the transparency.
30:48 And with transparency come more questions, which I guess a double edged sword for you. I don't know
30:54 how you handle that. If you respond to people on Twitter, how do you look at that?
30:58 Well, we tend not to. We think if people watch closely what we do over time, they will see that
31:06 ARK is a liquidity provider, unlike a lot of other institutions. There are a lot of
31:13 asset managers that are momentum driven. In fact, it's part of their scoring system. If the price
31:21 is going up, if the revenue growth is accelerating, buy, buy, buy, buy, buy. Now, that's a feature
31:28 that a lot of portfolio managers use. We're the opposite. If we see one of our stocks up 20, 30,
31:38 50, 100, 200 percent in a short period of time, we will take profits. It's clearly the momentum
31:46 buyers wanted. They're willing to pay up dramatically. And at the same time, there are
31:52 probably other stocks in our portfolio that are suffering some short term setbacks. And we think
31:58 both of those are short term moves because there is a lot of volatility, as you can tell, in our
32:06 portfolios. So we're very opportunistic in terms of providing liquidity when buyers wanted and
32:16 we are also buyers when others want liquidity. So is that one of the reasons you sold NVIDIA
32:22 when you did? I know in the market, they just want to say, "Oh, she sold it." But you were
32:26 early in NVIDIA. But how do you look back on that, I guess? Yeah. So we bought NVIDIA when we started
32:34 ARX funds in 2014 at roughly five dollars. And I remember in 2015, Tasha Keeney came into our
32:44 brainstorm and said, and now this is when PCs were falling. They were dropping at a double digit rate.
32:52 NVIDIA back then was nothing but a PC gaming chip company. Tasha comes into our brainstorm, says,
32:59 "You know, it seems like the brains or the central nervous system of an autonomous vehicle is going
33:07 to be a GPU." I said, "You are kidding." I said, "Nobody knows that." And with that and a further
33:15 study of how important GPUs were going to become to artificial intelligence, it became one of the
33:22 top stocks in many of our portfolios, including our genomics portfolio. And so if you look at
33:31 our flagship portfolio since 2014, NVIDIA is the fourth largest returning stock. So top is Tesla,
33:42 then GPTC, then Invitae, a genomic stock, and then NVIDIA. So we were there. And we own it in
33:51 our specialized portfolio still, but 25 times revenue for NVIDIA, which is mostly in the
33:59 hardware space. I know they're trying to get into software and I hope they do. We do own it in other
34:06 portfolios. But I also know that the hype around AI is a recipe for an inventory glut at some point.
34:15 I don't know if it's going to happen a year from now or a quarter from now or two years from now.
34:21 But I also know that the Twilio is at two and a half times revenue, UiPath at six or seven times
34:32 revenue, and that's on this year's revenue. The recent paper we wrote, which is an AI paper,
34:38 it's on our ARK-fund site, shows trailing 12 months. So I'm focused more on current year
34:49 multiple of revenues and Tesla at six to seven times. These are AI projects. And as I mentioned
34:57 before, these are software projects, not so much hardware. And the software pull through
35:05 from AI hardware is going to be somewhere in the eight to 20 times range. So it's going to be a
35:13 much bigger market. So whereas we were in NVIDIA, have been, still are in the more specialized
35:19 portfolio at a lower percentage because we are paying attention to valuation. We're onto the
35:25 next big beneficiaries of artificial intelligence. And you're early and some of the people are late
35:32 and you could take advantage, but the markets are irrational. So it's like, part of it is like,
35:36 do you hang on longer because then people catch on and then you'll get more, make more money.
35:39 I mean, do you factor that in? You know, in a very unhealthy market,
35:45 what tends to happen is the market narrows. And a lot of people have been concerned that the
35:50 magnificent seven have taken so much oxygen out of the room in terms of this year's rally.
35:57 What gratified us in the first six months of the year is despite not owning any of the
36:04 magnificent seven, except for Tesla, we outperformed even the Q's. And we owned a slight
36:12 bit of meta, but a partial position. That tells us that the bull market in innovation is broadening
36:23 out. And that's a healthy development for innovation. As for the rest of the market,
36:29 I don't know. I think there's going to be a lot of disruption and dislocation in the
36:36 traditional world order because of innovation. So I'm happy to see innovation is broadening out
36:43 in terms of the market rewarding it. We'll see if that happens for the market as a whole,
36:47 for the broad based indices. Okay. We're going to do like a rapid fire,
36:51 but before we do, we have again, Cathie Wood, ARK Invest on the Raz report in November. If
36:56 you're listening, come to Benzinga FinTech deal day or the future of digital assets.
37:00 If you're listening in today, we have awesome people. It's great lineup, but we're going to
37:05 do a little rapid fire because we only have a few more minutes with the awesome Cathie Wood,
37:10 who you guys, she's in the media, she is out there and you're going to get people loving you,
37:16 people not liking you and saying, oh, this, that. And what I like is you march to your drummer and
37:23 you do your thing. And your Nvidia example is unbelievable. And what people say, oh, well,
37:29 she sold right before you bought it at $5. It's funny to me. It's funny to me. Now, if you had
37:37 a crystal ball, a prescient crystal ball, and you knew this was the high today, then I like-
37:43 But what did we do? I know one of the stocks we bought with some of the Nvidia was Coinbase.
37:50 Coinbase has tripled. Right. Exactly. There you go. So what did you,
37:55 that's the thing, it's money allocation. It's not like you bought Nvidia. What'd you say?
38:00 Portfolio management. That's what we do. And nearly a hundred bagger. Well,
38:07 let's just be more conservative, say 80 fold increase Nvidia, not bad.
38:13 I mean, like who, there's not one person on this planet that wouldn't take that. Okay.
38:18 Not one person. So exactly. All right. Before we go to our little quick rapid fire,
38:22 anything that isn't out there that we could break on the Raz report, won't publish today,
38:27 but in a couple of days, but anything that you got that no one, you know, it's our second time,
38:33 you know, you go on that other channel a lot more, but it's okay.
38:36 Give me a clue as to what could that be?
38:40 Crypto. It could be, it could be somebody on Tesla. I don't know. You have stuff in that brain,
38:49 just somewhere you just pull it out. It's like the brain just...
38:53 In terms of, well, we're in the news for our Bitcoin ETF filing and because it's with the SEC,
39:01 we cannot say anything, but I really do believe that the SEC is going to lose the gray scale case
39:09 and that's going to happen pretty soon. And that one of the ways that the SEC could respond is to
39:17 turn around and change the subject and approve not just one Bitcoin ETF, but a lot of the ones
39:26 that are on the docket right now. So it could happen. It could happen quickly. And, you know,
39:31 I think from an institutional point of view, then I think we're going to see a serious move
39:39 in. And what's interesting about that is the number of Bitcoin outstanding now is 19-ish million,
39:47 and the maximum will be 21 million. If institutions want to move in, that's going to be a lot of
39:56 incremental demand for not that much more incremental supply. So the only way to then do
40:04 that is to bid the price up if they really want to be a part of that. And we're going to talk a
40:11 couple of minutes, but your Bitcoin prediction at one point is a million dollars a coin. Are you
40:16 still a big believer in Bitcoin? Yes. Yes. Yes. Absolutely. Absolutely.
40:21 Ever more so. First global, private, no government oversight, digital, rules-based monetary system
40:31 the world has ever known. That's a big idea. And we think the total crypto asset market in 2030
40:38 will be valued at roughly $25 trillion. Right now, it's a little over a trillion.
40:45 And we think that Bitcoin is going to be more than half of that.
40:48 Do you have a prediction for this year or next year, 2024?
40:52 You know, we tend to be five years in our prediction. So the five to seven-year forecast is
41:02 in base case would be 650,000, and then whole case would be about double that.
41:08 And you believe in crypto, Bitcoin so much because one of the problems is a lot of those
41:14 brokerages that you could buy Bitcoin through, Voyager, a few others went bankrupt, FTX,
41:21 etc. How do people buy? How does a regular person buy Bitcoin? Or is it you think that institutions
41:26 are going to be the ones buying this Bitcoin stuff? And I ask because our whole digital
41:30 asset day is all about this. Yeah, I think institutions will be a big part of it. This is a
41:38 new asset class, very low correlations with any other asset class, except at extremes in all
41:46 markets, the correlations go to one. So, yes. And I also I think a Bitcoin ETF approval will help.
41:55 I think judicial, you know, judicial clarity, legislative clarity is all going to happen
42:03 within the next few years. This is an election year issue. I already know some young people
42:11 who have switched their allegiance when it seemed like Elizabeth Warren was going to lead
42:17 the Democrats into the anti-crypto world. I know of some young individuals whom I never thought
42:25 would change their allegiance, shifted from Democrats to Republicans. Now it's becoming
42:33 a little more bipartisan in the legislative branch. And I think it is because it's becoming
42:38 an election year issue. And so you can't be on the wrong side of young people and win an election.
42:46 Yeah, that is awesome. So just two last questions. So Coinbase is still
42:51 one of your largest holdings in the crypto space. You believe in Coinbase still?
42:56 Like big time? Yes. Yes, absolutely. We think it's going to be the institutional on ramp. It
43:02 signed the deal with BlackRock. And I think that was that was a very big deal in terms of,
43:09 you know, Larry Fink. Larry Fink is now all about Bitcoin. And so it's getting
43:15 much more institutional focus. You will remember there was a time when Larry Fink said
43:21 Bitcoin is environmentally a menace. And I don't think he's talking about that anymore
43:28 because actually Bitcoin is solving some environmental problems now that Exxon is
43:35 putting Bitcoin mining machines into natural gas fields so that instead of flaring the natural gas,
43:43 it can be used to mint Bitcoin. So there and utility ecosystems are using it to in their
43:51 solar ecosystems when the sun's, you know, created too much energy, it'll pour into Bitcoin mining
43:58 and they can overbuild solar and wind. So, you know, this is the convergence of technologies.
44:06 Now, that's awesome. We'll be discussing the Benzinga future of digital assets
44:09 in New York. But like two last questions is it's going to be quick answers, whatever is easiest.
44:14 Twitter's rebrand to X. Do you like it? I do myself. I think I'm I've taken to it.
44:22 It's kind of cool. It's like Elon cool. OK. All right. And then the last one is DraftKings is
44:28 also one of your top holdings. Do you think DraftKings faces a serious threat from the pen
44:33 ESPN bet sportsbook combination? You know, I I don't think so. We're watching this. We will be
44:43 watching the share gains carefully, but we're very impressed with what DraftKings has done
44:50 over the last couple of years, faced a lot of competition, pulled away from advertising and
44:56 started just getting more creative. And even to the point where, you know, they're they're bringing
45:02 NFTs into the ecosystem and and have gained share. So our analyst, Nick Roos, thinks DraftKings is
45:13 in the pole position here, along with FanDuel, of course. No, that is awesome. I want to thank
45:20 Cathie Wood, you know, ARK Invest. Follow them on Twitter. Read their white papers. It's easy to
45:26 read people that say negative stuff. But what they do is research and they put it to the public. I
45:31 mean, they tell you what they do. I don't think in our time in history, besides Warren Buffett,
45:36 where he gave those annual letters and you had those Q&A sessions where you had someone that's
45:41 so transparent and honestly, like, I don't know how you do it. Like you go to Twitter, if you read
45:46 the ads, people, some people love you, some people don't. I don't know if you read the read the ads.
45:50 I don't know how you do it. And you just march to your drummer and your research thus far. I mean,
45:56 look at the gains you had in NVIDIA, Tesla and a couple other you mentioned genomic space.
46:00 It's unbelievable. We appreciate you coming on the Benzinga Razz report. We're here for the people,
46:05 by the people. We have 30 million readers a month. And one of the biggest demands was to get you on
46:10 because we're here for the people, by the people to hear the answers. That is not a two minute
46:16 segment. It's a little bit longer and let you provide your research in an oral format. So
46:21 really appreciate you coming on again, Cathie Wood. Thanks again.
46:24 Thank you so much, Jason. And yes, the truth will win out. That's my response to the Twitter
46:32 haters. The truth will win. The truth. So you don't do you read? You don't look at
46:36 you don't look at the Twitter haters? No, no, no, no, no, no, no, no. I don't
46:39 have time to do that. But but I also know our research, the depth of our research is going to
46:46 get us to the right answer before it's going to get others to the right answer. No one's doing
46:51 the research the way we're doing it, starting with Wright's Law. And we truly do believe
46:56 that truth will win out for the people. And you've so far proven that out. The
47:04 last question is, are you ordering a Cybertruck? You know what? I I'll tell you why I haven't,
47:10 although I might still. I my very first car was a Mustang and I love Mustangs. And before we got
47:19 into electric vehicles, I said, I got to get another Mustang before. And then I said, you
47:24 know, is that trying too hard? Is that trying too hard? I have a Model three and a Model Y.
47:32 And and yet I do think the Cybertruck will expand the market to people like me. I don't need to haul
47:40 anything. But I'm hearing about a lot of my friends, mostly guy friends, who are for the
47:47 first time in in their lives buying a truck and they don't need a truck. So, you know, I think
47:54 it's going to expand the market. Oh, yeah. I never wanted a truck. I am when I get in line or what
47:59 have you, I'm getting that truck again. Thank you, Kathy. What are our investors coming out?
48:03 Congratulations on all your success. Thank you so much.
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