Cathie Wood isn’t buying the artificial intelligence hype at Nvidia (NVDA).
The founder of Ark Invest and recognized investor in technological innovation, tweeted Monday that the AI darling is now too expensive.
“Since 2014, @ARKInvest believed that Nvidia saw the future of AI before most other chip companies, and now we believe it will continue to propel the age of AI. At 25 times the revenue expected for this year, however, $NVDA has a price ahead of the curve,” Wood tweeted.
Nvidia shares have risen more than 30% since the company reported earnings on May 24, and the stock hit a market capitalization of $1 trillion on Tuesday.
Wood and Ark sold their holdings in Nvidia in January. Since then, Nvidia shares have more than doubled as investors have called the company the undisputed leader in the arms race to manufacture AI chips. Over the past week, Nvidia announced revenue forecasts that blew Wall Street estimates and followed that news with new AI-focused product launches.
It’s not just the surge in Nvidia stock. On Friday, Marvell Technology (MRVL) said the company expects revenue attributable to AI to double next year. Shares rose more than 30% on the news amid a broader AI-infused tech rally that continued into Monday’s trading session.
With the Nasdaq Composite (^IXIC) now up more than 2.5% in the past five days, Wood says there will be other winners in the AI space besides Nvidia.
“Other companies with visionary leaders, strong global distribution and, perhaps most importantly, large pools of high-quality proprietary data should be great #AI winners, with surprisingly better than expected revenues and profits over the coming years,” Wood tweeted.
There will be “dozens” of AI winners, according to Wood. But the one that stands out from Ark, as is often the case, is Tesla (TSLA).
Wood argues that at six times earnings, Tesla stock is much cheaper than Nvidia’s current valuation of 25 times earnings.
“(Tesla) is the most obvious beneficiary of recent breakthroughs in #AIas it targets an $8-10 trillion revenue TAM in autonomous mobility by 2030,” Wood wrote.
With several positive headlines in recent news, including a growing relationship in China, Tesla shares rose more than 7% amid the broader tech rally.
Wood’s comments on Nvidia come as its flagship ETF, the Ark Innovation Fund (ARKK), struggles to regain pandemic dominance. The ETF soared during the risky 2020 bull market with high-flying pandemic darlings like Tesla, Zoom (ZM) and even Nvidia contributing to the gains.
But as the Federal Reserve launched its most aggressive interest rate hike campaign in four decades, risky bets became less popular with investors. Some of Ark’s major holdings, such as Zoom, Roku (ROKU), and Coinbase (COIN) are well off their pandemic highs.
The fund itself has lost more than $1 billion in market capitalization in 2022, as shares have fallen nearly 67%.
Josh is a reporter for Yahoo Finance.
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