Cathie Wood had yet another helping to some of her favorite large-cap AI stocks over the past month. Indeed, as interest rates fall and Donald Trump makes his return to the White House, I see Cathie Wood and her line of Ark Invest funds standing out as major winners. Undoubtedly, the stage may very well be set up for Cathie Wood to make another rise to fame — something I predicted in my prior pieces. The big question is whether another frenzy will start in the new year, as investors opt to take on more of a risk-on appetite by going for growth.
Over the past month, the flagship ARK Innovation ETF (NYSEARCA:ARKK) soared almost 20%, a remarkable comeback move that could act as some sort of turning point for Cathie Wood and disruptive tech at large. In this piece, we’ll look at two of the more recent Cathie Wood buys and spoiler alert: they’re both relatively cheap AI plays.
Key Points About This Article
- Cathie Wood’s portfolio could thrive under the Trump era as deregulation and low rates take hold.
- AMD and Meta stand out as timely AI stocks Cathie Wood has been buying up of late.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Advanced Micro Devices
Advanced Micro Devices (NASDAQ:AMD) stock may very well be Cathie Wood’s new favorite way to play the semiconductors. Undoubtedly, AMD has the grand ambition to catch up to the great Nvidia (NASDAQ:NVDA), a firm that’s picking up the pace today but could be in for a slowdown at any point over the next five years. Should Nvidia experience a relative slowing of pace, AMD is the firm that stands to profit.
In a prior piece, I referred to AMD as an underdog with a shot at going after Nvidia with its new line of 2025 chip launches. The price of the stock may have changed, but my viewpoint has not. With Wood hiking ARK Invest’s stake in the name by around $15.7 million on the latest dip, I’d argue it’s a good time to consider doing the same if you’re keen on placing a bet on an AI juggernaut that we cannot count out of the AI race here or likely ever. Further, if AMD stock keeps retreating lower from here, I’d not be surprised if Wood had yet another helping to shares.
While AMD’s recent outlook, which followed a decent Q3 number, may have fallen short of expectations, I view the latest plunge in the stock as way overdone! Shares have lost nearly 33% of their value from peak levels while mostly sitting out on the latest market-wide Trump bump (or Trump rally). To make matters worse, some may view the company’s latest plan to cut jobs (by about 4%) as a potential concern.
Shouldn’t AI firms put their foot on the gas rather than cut back?
Despite the surprising cuts, I don’t think the growth profile will be slowed down in the slightest. CEO Lisa Su knows what’s on the line, and she’s ready to put up a fight to gain ground in chips.
Meta Platforms
Meta Platforms (NASDAQ:META) may one day become Wood’s new favorite Magnificent Seven stock, given she took profits on Tesla (NASDAQ:TSLA) stock while adding to Ark Invest’s META position. With a hip new wardrobe, a song with T-Pain, and the same aggressive growth plans, CEO Mark Zuckerberg seems like a man on a mission.
It should be obvious why Meta is one of the newest apples of Cathie Wood’s eye — it’s investing heavily in growth, but, perhaps most importantly, the company has a pretty solid batting average. It’s these two traits that may one day crown META as the world’s largest company.
Take Threads as an example of an innovation quietly evolving into another money-maker for Meta. Looking ahead, Threads will begin serving ads, adding another potential cash cow to its social-media family of apps, which is the cash engine behind Meta’s more ambitious long-term bets.
Also, with Trump coming back to the White House and tech deregulation potentially on the horizon, I’d argue that nothing can slow the firm down as it looks to become a more aggressive grower in 2025 and beyond. Indeed, Meta received quite a bit of flack in the past for buying up rivals like Instagram.
If Trump’s administration is more conducive to mega-cap M&A, I’d look at Meta as a firm that could really benefit from more dealmaking. It has a cash-producing business that can feed its seemingly insatiable appetite to invest in growth. And with Trump in the White House, I think Meta will have a pass to feast.
Sure, Wood isn’t exactly what you’d consider a deep-value investor. However, with META shares going for just north of 23 times forward price-to-earnings (P/E), I view the Magnificent Seven titan as incredibly undervalued, even if not all of its growth projects end up hitting the spot.
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