Cathie Wood Adjusts AI Stock Holdings Amid Market Movements

Cathie Wood is recognized for her strategic investment approach that often diverges from mainstream trends, focusing on long-term growth. This week, she made notable adjustments to her portfolio related to artificial intelligence (AI) stocks, which she believes have significant revenue potential. Wood sold shares of a prominent AI company that has appreciated 1,000% in three years while increasing her stakes in two leading AI chip producers. Let’s delve into her recent investment activities.

Reducing Exposure to Palantir Technologies

During recent trading sessions, Wood sold a portion of her holdings in Palantir Technologies (NASDAQ: PLTR), a key player in AI-driven software systems. As of May 9, Palantir remained a significant part of her flagship Ark Innovation exchange-traded fund (ETF), holding a 6% weighting.

Despite a strong revenue report and growing demand, Wood opted to realize some profits by reducing her position. Palantir shares are currently valued at roughly 200 times forward earnings estimates, a factor that may influence short-term stock performance. Nevertheless, Wood continues to maintain a positive outlook on Palantir’s long-term growth potential.

Increasing Stakes in AI Chip Innovators

In contrast to her sale of Palantir, Wood seized the opportunity to increase her investments in AI chip manufacturers Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) this week. Nvidia’s valuation has significantly dropped to 26 times forward earnings estimates from 50 times earlier in the year. Similarly, AMD is currently trading at 25 times forward earnings estimates, which has also seen a decrease from over 30 times in recent months.

Nvidia’s position as a market leader in AI chips, coupled with its solid revenue growth and innovation strategy, makes it an attractive option for investors focused on AI. In addition, AMD has reported impressive earnings growth, with a gross margin of 50%. CEO Lisa Su noted a robust performance in both revenue and profitability, showcasing AMD’s strengths in CPUs and the growing AI sector.

For investors observing Wood’s actions, these moves highlight Nvidia and AMD as compelling long-term investments. With the accelerating AI market, their current valuations may not last, prompting Wood to strategically expand her holdings.

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Adria Cimino holds no positions in the mentioned stocks. The Motley Fool recommends Advanced Micro Devices, Nvidia, and Palantir Technologies and has publicly disclosed some positions.

The views and opinions expressed herein belong to the author and do not necessarily reflect those of Nasdaq, Inc.