Ark Invest's Cathie Wood Is Betting Big On AI With These 4 Stocks — Including One That Could Skyrocket 670%

1 Jul 2023

Cathie Wood, the renowned investor at Ark Invest, has gained a reputation for her investments in groundbreaking advancements. One of her notable focuses is artificial intelligence (AI), a highly regarded technology that is causing significant disruption and driving transformation in various industries.

Artificial intelligence - Figure 1 — Photo finance.yahoo.com

When it comes to AI stocks, it's challenging to overlook the impressive progress made by Nvidia Corp. (NASDAQ: NVDA). The stock of this significant chip manufacturer has skyrocketed by a remarkable 187% in the current year, propelling the company's valuation past the $1 trillion mark.

Ark Invest's main investment fund Ark Innovation ETF (NYSE:ARKK) sold its stake in Nvidia in January, however, some of its other ETFs still maintain holdings in the chipmaker.

During a recent conversation on Bloomberg Television, Wood expressed her belief that Nvidia is poised for long-term success. However, she also highlighted a fresh selection of stocks that stand to gain from the strong groundwork laid by Nvidia.

The main focus is on software.

According to her perspective, for every unit of hardware that Nvidia sells, software providers and SaaS providers will generate $8 in revenue. Thus, we are currently focusing on the software providers that are in a similar position to Nvidia when we initially invested in it.

The highly skilled investor proceeded to designate three software firms she predicts will flourish due to AI. Take a glimpse at the threesome as well as another company she refers to as "the largest artificial intelligence opportunity."

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UiPath is a company that specializes in software for automating processes and is known for its robotic process automation technology. They offer a wide range of solutions designed to help businesses streamline their operations. One of their notable products is the UiPath Business Automation Platform, which utilizes artificial intelligence to comprehend, automate, and oversee entire workflows efficiently.

During the initial three months of 2023, the company experienced an 18% increase in its annual revenue, amounting to a substantial $289.6 million. An important highlight was the remarkable dollar-based net retention rate reaching an impressive 122%.

The stock has experienced an impressive 36% increase so far this year, although it hasn't consistently been in high demand: In the year 2022, UiPath shares plummeted by a massive 70%.

Ark Innovation ETF, managed by Wood, possesses a sumptuous 28,363,938 units of UiPath. This esteemed holding commands a substantial market worth of $486.73 million, positioning UiPath as the fifth most prominent asset in Ark's portfolio.

Twilio's cloud communication platform permits businesses to create and merge different ways of communication within their applications. The set of tools provided by Twilio enables developers to effortlessly include voice, messaging, and video, thereby assisting companies in improving customer interaction.

During the initial three months, Twilio exceeded 300,000 currently engaged clients. Simultaneously, the company's earnings experienced a 15% increase compared to the previous year, totaling $1.01 billion.

During the recent financial call, Jeff Lawson, the Co-Founder and CEO of Twilio, expressed his confidence in the significant impact that artificial intelligence will have on the growth of the company in the future.

The Ark Innovation exchange-traded fund has a significant holding in Twilio, owning 4,771,968 shares. The stake is currently valued at $304.50 million in the market.

"Telemedicine Giant TDOC Strengthens Healthcare"

The primary fund managed by Wood likewise possesses shares valued at $300.43 million in the telemedicine enterprise Teladoc Health.

The organization's platform links individuals in need of medical assistance with healthcare providers using video, telephone, and messaging features.

During the height of the COVID-19 outbreak, when face-to-face nonurgent healthcare was temporarily suspended, there was a significant surge in the need for telemedicine services.

In the year 2020, Teladoc gained significant investor interest due to a tremendous 98% increase in its revenue.

Despite the pandemic being mostly behind us, the company is still witnessing growth in its operations. Teladoc's revenue for the first quarter demonstrated an 11% rise compared to the previous year.

Nevertheless, the stock failed to sustain its positive progress. Currently valued at $25.80 per share, Teladoc has experienced a significant decline of over 90% since reaching its peak in February 2021.

"The Ultimate AI Game"

Wood's boldest move in the realm of artificial intelligence is putting her money on a company that isn't typically associated with AI investments: Tesla Inc. (NASDAQ:TSLA).

"We constantly discuss Tesla, and it's actually the largest artificial intelligence venture," she mentioned.

The explanation pertains to the self-driving technology of the electric vehicle organization.

ARKK's biggest investment is Tesla, which makes up 11.59% of their portfolio.

Wood anticipates that self-driving taxi platforms will generate a substantial amount of revenue worldwide by 2030, ranging from $8 trillion to $10 trillion. This figure is particularly remarkable considering the current negligible revenue generated in this sector.

Due to Tesla's proficient abilities in this area, the thriving autonomous taxi industry has the potential to skyrocket its share price to unprecedented heights.

According to her statements, she expressed her belief that if our research is accurate, the stock value will reach $2,000 by the year 2027.

Given the current trading price of Tesla shares at approximately $257, Wood's projected target price suggests a promising potential increase of over 670%.

Investing in groundbreaking advancements can be highly profitable — but at times, it can appear unpredictable. For example, although Tesla stocks have increased by more than twofold this year, they are still more than 30% below their highest point in November 2021. If you dislike this level of uncertainty, you may prefer to explore stable industries that offer significant financial rewards to investors, such as those serving fundamental human requirements like sustenance and housing. For individuals searching for a means to generate passive income without the unpredictability linked to stocks traded publicly, there are opportunities to invest in these vital service enterprises via the private market.

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This blog post titled "Cathie Wood from Ark Invest Has High Hopes for Artificial Intelligence and Recommends 4 Stocks to Invest in, One of Which Has a Potential Increase of 670%" was first published on Benzinga.com.