Cathie Wood, the founder of ARK Invest, remains confident in her firm's AI investments despite scaling back on Nvidia shares prior to their significant rise last year. Wood initially invested in Nvidia in 2014 when the stock was approximately $4 per share. The flagship ARK Innovation ETF held the stock until it surged to around $400 before selling off most of the position just before Nvidia's dramatic rally last year. Wood explained that the decision to reduce Nvidia holdings was based on the belief that Nvidia's success would benefit other companies. Despite Nvidia's ongoing prominence, Wood highlighted that the semiconductor industry is experiencing a pause as companies reassess their AI strategies. Wood reaffirmed her strong stance on autonomous driving as the 'biggest AI project on earth' and increased Ark's Tesla position in the first quarter. Ark's 2023 analysis projects Tesla's share price to reach $2,000 by 2027. The Ark Venture Fund recently disclosed stakes in [f29a0264].
Ken Laudan of Buffalo Funds, who manages the Buffalo Large Cap Fund, has changed his opinion about how long it will take for 'AI adopters' to make the technology useful. Laudan estimated that 'hyperscalers' investing heavily in AI equipment, such as Meta Platforms Inc., eventually would need to generate an annualized $300 billion in annual revenue 'just to be gross-margin neutral to their existing cloud-hosting business.' Laudan asked: 'When will hyperscalers - which represent 53% of Nvidia's revenues - begin to base GPU purchases on end-user demand, rather than buying them on anticipated demand?' Laudan said investors need to see 'hyperscalers dramatically shift' so the gap between AI infrastructure spending spend and AI adopter revenue begins to close 'dramatically.' The Buffalo Large Cap Fund tends to hold about 70 stocks. Laudan said he was 'trimming where I need to in the AI ecosystem, staying overweight in industrials and healthcare (relative to the Russell 1000 Growth Index), and looking at some of the beaten-up large-cap software names.' Laudan still likes Eli Lilly & Co. within healthcare. Microsoft Corp. was the largest holding of the Buffalo Large Cap Fund as of March 31. Laudan appreciates 'industrial compounders,' such as GE Aerospace, Xylem Inc., and Westinghouse Air Brake Technologies Corp. Within healthcare, Laudan still likes Eli Lilly & Co., Abbott Laboratories, DexCom Inc., AstraZeneca PLC, and Merck & Co. [b85d71a2].
In David Rolfe's Wedgewood Partners 2nd-Quarter Letter, he discusses the performance of various stocks in the portfolio. Top performance contributors for the second quarter include Taiwan Semiconductor Manufacturing, Alphabet, Apple, Motorola Solutions, and Meta Platforms. Top performance detractors for the second quarter include PayPal, PoolCorp, CDW, Old Dominion Freight Line, and Visa. Rolfe highlights Apple's sustainable growth and its competitive advantage in hardware and software development. He also mentions Apple's AI strategy and its potential for growth in the coming years. The letter emphasizes the dominance of technology stocks in the market and the potential risks associated with the AI boom. Rolfe concludes by discussing the importance of differentiation in building a portfolio and the challenges of passive index investing.
According to a recent article by The Motley Fool, two AI stocks ranked among the top five holdings for at least half of the 10 richest hedge fund managers. Nvidia was a close runner-up, as was Meta Platforms. The article suggests that these two AI stocks should remain big winners over the long term [e40b852b].
Wood predicts significant interest rate cuts in 2024, driven by economic recessions and rate reductions in several countries [f29a0264].
Megacap technology stocks, Nvidia and Meta, are compared to determine the better AI stock to buy today. Nvidia stock is predicted to dominate in artificial intelligence (AI) and is considered the undisputed king of AI. However, billionaires are reportedly dumping Nvidia stock and investing in other value stocks. Despite this, two growth stocks are recommended as screaming buys in 2024 and beyond. The article includes opinions from Parkev Tatevosian, a Fool.com contributor, who has no position in the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The article was published on July 16, 2024 [7d1d2a84].