The world of ETFs continues to evolve with the market trends, and ARK Investment Management, spearheaded by CEO and CIO Cathie Wood, remains at the forefront of this revolution. Her recent comments have provided insight into the firm's strategies, emphasizing a bright future for companies focusing on artificial intelligence (AI) and software, like Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA).
While Nvidia has seen impressive growth, Wood draws attention to a new generation of stocks poised to benefit from the platform Nvidia has built. She argues that while Nvidia is fundamentally a hardware company, the bigger winners in the long run will be software providers. ARK's research suggests that for every dollar of hardware that Nvidia sells, software-as-a-service (SaaS) providers stand to generate eight times that revenue.
"We are looking to the software providers who are actually right now where Nvidia was when we first bought it", Wood said. This suggests an enormous potential upside for such companies, likening their current positions to Nvidia's when its stock was in the $5-10 billion range, before it soared to $1 trillion in market cap.
Tesla, on the other hand, is often viewed as an automotive company, but Wood argues that it's much more than that. It represents one of the biggest AI opportunities on the market, especially given its dominance in autonomous driving technology. ARK's research predicts that by 2030, autonomous taxi platforms will globally deliver $8-10 trillion in revenue. The firm believes that Tesla, with its vast amount of real-world driving data, stands a good chance of leading this lucrative market.
"Tesla is the largest position in our flagship portfolio, ARK (NYSE: ARKK). Why is this? Because autonomous taxi platforms we believe globally will deliver by 2030 $8-10 trillion dollars in revenue from almost zero right now", Wood explained.
The AI market is not limited to these giants, though. ARK sees the market, currently valued at around $30-40 billion, multiplying eight times by 2030. AI is set to add more value to ARK's technology platforms than any other factor, catalyzing their growth.
In terms of geographical diversification, Wood also highlighted the importance of China, a country that has prioritized innovation for a long time. Tesla's recent interactions with top leadership in China further underscore the potential of the market.
Overall, ARK continues to remain bullish on companies at the intersection of AI, software, and transformative technologies, expecting to see significant value generation in the coming years. The firm's strategy underscores the significance of active management, vision, proprietary data, and domain expertise for success in the AI space. The future, according to ARK, seems to be about AI driving the software economy forward.
Rate this article