Cathie Wood offered her thoughts on stocks connected to artificial intelligence technology in a media appearance on Friday.
What Happened: Explaining Ark’s investment logic surrounding Nvidia Corp. NVDA, Wood said in a CNBC interview that her firm started its research on AI while studying the possibility of autonomous vehicles way back in 2014.
Nvidia was $5 on a split-adjusted basis at the time but has since closed in on $450, she noted. Ark bought the stock all the way up until Nvidia reached the mid- to high-$300s, and the firm’s flagship Ark Innovation ETF ARKK sold the stock because Ark saw a brewing inventory problem, she added.
Wood noted that Ark got back into Nvidia in the fourth quarter when the stock cratered and that the stock took off this year after the ChatGPT craze. However, all of Ark’s other stocks, many of them driven by AI, were still very weak, she said.
Twilio Over Nvidia: Nvidia was trading at 25 times revenue, while cloud communication software services provider Twilio, Inc. TWLO — a huge beneficiary of AI — was trading at two times revenue, Wood noted. Therefore, selling Nvidia was a valuation judgment call, she said.
“We had done very well, you know $5 to $350 to $400 and we also kept it in our narrow, more narrowly focused portfolios, but took profits there as well,” Wood said.
Nvidia, Wood said, is just an incredible play on AI and is priced accordingly. Not many people know that Twilio powers communication around Uber, she added. “Twilio has roughly a trillion consumer business interactions per year now,” she explained.
Wood said that companies with “visionary management, a good distribution, global in this case and proprietary data” would be AI winners. She added that Twilio has data on business-to-consumer communications that no one else has.
“And we think the secret sauce and the real beneficiaries of AI are going to be those with proprietary data,” she said.
Nvidia ended Friday’s session down 1.10% at $454.69 and Twilio fell 3.80% to $66.89, according to Benzinga Po data.