AI Boom Could Boost Ark Innovation ETF, Says Cathie Wood

JJohn October 20, 2023 7:17 PM

Ark Invest's Cathie Wood believes the surge in artificial intelligence (AI) could significantly benefit investors in the Ark Innovation ETF. Despite the fund's recent decline, Wood remains optimistic about the potential of AI-related stocks in the portfolio.

Ark ETF primed for AI boom

According to Cathie Wood, founder of Ark Invest, the ongoing boom in artificial intelligence (AI) could tremendously benefit investors in the Ark Innovation ETF. She expressed her optimism during an interview on CNBC's 'ETF Edge'. Wood believes that we're now entering the prime time for AI technologies, shifting from dream to reality. This optimism stems from her confidence in the disruptive potential of AI technologies, which form a significant part of the ETF's portfolio.

Despite the recent underperformance compared to the Invesco QQQ Trust, the Ark Innovation ETF has enjoyed a 17% rise this year. The fund, which primarily focuses on disruptive technologies such as AI, has seen its fortunes tied closely to the boom in AI-driven tech. However, it's worth noting that the ETF is still over 76% off its record closing high, achieved in February 2021. Regardless, Wood remains bullish on the prospects of AI-related stocks within the fund.

Not all tech giants positioned for AI success

While emphasizing the potential of AI, Wood cautioned investors to be discerning with their investments in the sector. She singled out the 'Magnificent Seven', a group of mega-cap tech stocks, suggesting that not all might be well-positioned to benefit from the AI boom. Tesla, a top holding in the ETF, is an exception to this cautionary note. Wood's skepticism about the other tech giants stems from her belief that AI will cause significant disruption in the sector.

Ark ETF: A bet on AI's future

Wood argues that the Ark Innovation ETF is essentially a bet on the future of AI. Rapid advancements in AI technology could pave the way for a new generation of industry leaders, a prospect that Ark's ETF is geared towards. Wood believes that the surprise element offered by these new, AI-harnessing platforms will be significant and help the ETF earn its way back into portfolios.

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