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Cathie Wood Says Nvidia Performance Was Outstanding, But Predicts ‘Short-Term Indigestion’ for Company’s Business as Clients Reassess AI Strategies – ARK Next-Generation Internet ETF (ARCA:ARKW), ARK Autonomous Technology & Robotics ETF (BATS:ARKQ)

Cathie Wood Says Nvidia Performance Was Outstanding, But Predicts ‘Short-Term Indigestion’ for Company’s Business as Clients Reassess AI Strategies – ARK Next-Generation Internet ETF (ARCA:ARKW), ARK Autonomous Technology & Robotics ETF (BATS:ARKQ)

In a recent investor letter, Cathie TreeCEO ARK Investmentemphasized the key role of NVIDIA Corporation NVDA On the company’s performance despite short-term challenges.

What happenedIn his letter to investors, Wood highlighted Nvidia’s significant contribution to ARK’s performance since its founding in October 2014. He described Nvidia as a major player in the AI ​​space. “We initially described Nvidia as the leading ‘pickaxe and shovel’ player in the AI ​​space,” Wood wrote.

Despite recent market volatility, ARK’s ARK Next Generation Internet ETF ARQW It continues to have exposure to Nvidia with a 1.39% weighting as of June 28.

Wood acknowledged the impact of this Open AINvidia’s “ChatGPT moment” coincided with the Federal Reserve’s significant interest rate hike. This led to a surge in investor interest in Nvidia and other cash-rich stocks, prompting ARK to seek diversified exposure to the AI ​​revolution.

He also noted that the weak macro environment and long-term corporate strategic decision-making pose challenges for software companies. Despite this, Wood remains optimistic about AI investments and sees AI as a core innovation platform that will drive value creation for many technologies and startups.

“Given the high and likely unmet near-term expectations, customers are likely to re-evaluate their AI strategies, which will cause some short-term indigestion for Nvidia’s business,” Wood wrote.

See Also: Nvidia, Apple Supplier TSMC Shares Rise Premarket After Morgan Stanley Raises Price Target Ahead of Earnings

Why It’s Important: This letter comes after ARK Invest made a significant move in Nvidia. In late June, the firm ARK Autonomous Technology and Robotics ETF ARQ He sold 33,834 shares of Nvidia stock worth $4.3 million. This was part of a series of transactions conducted by ARK’s various ETFs.

Despite these adjustments, Wood remains confident in ARK’s AI investments, emphasizing the company’s continued exposure to emerging tech players. He initially invested in Nvidia in 2014, when the stock was around $4 per share adjusted for splits.

Meanwhile, Nvidia’s sky-high valuation has given some investors pause, with experts warning of a possible revaluation. Despite this, Nvidia’s performance has been exceptional, with the stock making it the fifth-largest contributor to ARK’s ARKK performance.

Price MovementNvidia Corp. closed at $134.91 on Wednesday, up 2.69% for the day. The stock rose 0.51% in after-hours trading. Nvidia has gained $86.74, or 180.07%, in impressive year-to-date growth, Data from Benzinga Pro.

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Photo via Ark Invest

This story was created and edited using Benzinga Neuro Close Bagalkote