00:00Today on Forbes, Inside Superstar Investor Kathy Wood's AI Stock-Fueled Comeback
00:06Among all the growth-minded investors who have seen their portfolios soar through this year's
00:12AI craze, one familiar name has outperformed the rest. Kathy Wood's ARK Innovation ETF,
00:20ARKK, is up 87.1% in the last year, outperforming every other ETF and mutual fund tracked by the
00:28American Association of Individual Investors as of the end of September, aside from single-stock funds.
00:35Its gains have been largely fueled by AI-related stocks like Palantir Technologies, Advanced Micro
00:42Devices, Tempest AI, and its longtime largest holding, Tesla, which Wood tells Forbes is the
00:48quote, largest AI project on Earth, marveling at its work developing robo-taxis. The last time Wood
00:56was riding this high following her flagship fund's 157% return in 2020, her idealism and stubborn
01:04conviction soon backfired, leading to a 14% loss in 2021 and a dreadful 67% crash in 2022.
01:13Even after it has tripled since then, it remains 42% below its February 2021 peak.
01:19The flagship fund has $8.3 billion in assets under management, down from $17 billion at the end of
01:262020, signaling that most investors abandoned her fund during its slide. Wood dismisses any notion
01:33that she is being swept up in another bubble like the COVID-19 stock surge. Wood says, quote,
01:39The companies investing in AI are some of the most profitable companies in the world.
01:44The reasoning models are astounding people in terms of how much more they can do if you give
01:48these models time. I think there were a lot of people expecting at some point the performance
01:53would level out. It's not leveling out at all. Almost every AI stock has performed well this year,
02:00but Wood, ARK's 69-year-old founder, CEO, and chief investment officer, has had a nose for the
02:06biggest winners even relative to their peers. ARK owns more AMD than larger competitor NVIDIA,
02:13two semiconductor stocks that make up 4.0% and 1.1% of ARKK's portfolio, respectively.
02:21It's a prescient choice, with AMD doubling in value this year compared to NVIDIA's more modest 36% gain.
02:29Wood says AMD's lower valuation, at less than $400 billion, while NVIDIA's market cap is $4.4 trillion,
02:36makes its growth prospects more appealing. And its superiority in chips with more expansive memory
02:42is becoming more of a differentiator. Palantir has done far better, gaining 337% since last November.
02:52Its data analytics technology helps government agencies and commercial customers blend and
02:57find patterns in massive data sets. And its 12-month sales have grown 39% year-over-year
03:03to $3.4 billion, with $763 million in net profit. But Palantir is the poster child for the AI stock
03:12bubble, according to most value-oriented investors. Its $430 billion market cap is a jaw-dropping 126 times
03:21its sales. Though Wood has taken profits in Palantir, selling 70% of ARK's stake since August 2024,
03:29it still makes up 4.2% of its flagship fund as its ninth-largest holding.
03:36Wood, referencing her firm's 11.9% holding in the electric vehicle giant Tesla,
03:41says, quote,
03:41That's high praise from Wood, who has loved and owned Tesla for almost a decade. It was a key
04:01contributor to her 2020 performance with its 731% gain that year. Then it mirrored her fund's crash
04:08in 2022, losing 68%. Last year, ARK raised its price target for the stock to $2,600 per share by
04:162029, implying a market value of around $9 trillion. Tesla shares currently trade for $443,
04:24and the company has a market capitalization of $1.4 trillion. ARK estimates that by 2029,
04:3286% of Tesla's earnings will be attributable to its robo-taxi business, which it just launched in
04:38Austin, Texas this June. With $1 billion in ARKK invested in Tesla, the holding is twice the weight
04:45of its second-largest position, Coinbase. But aside from that investment, Wood generally doesn't invest
04:51very much in $1 trillion market cap tech giants. Amazon, Meta, and NVIDIA are all in her portfolio,
04:59but not in the top 15. For full coverage, check out Hank Tucker's piece on Forbes.com.
05:07This is Kieran Meadows from Forbes. Thanks for tuning in.
05:21Thanks for tuning in.
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