In this article, we discuss 10 Artificial Intelligence Stocks in Cathie Wood’s Portfolio. You can skip our detailed analysis of Wood’s hedge fund and recent developments, and go directly to read 5 Artificial Intelligence Stocks in Cathie Wood’s Portfolio.
Cathie Wood does not need any introduction in the investment world. Her investment career spans over decades and her hedge fund, ARK Investment Management, is famous for betting on technology companies that are disrupting the industry with their innovative products and services.
Recently, Cathie Wood launched ARK Transparency Fund, maintaining a focus on the tech sector. This development comes at a time when 6 out of 8 ARK funds are in dire straits for 2021. ARK Innovation, the fund’s flagship ETF, is down 21.68% year-to-date. However, according to Wood, placing bets on disruptive innovation has been fruitful in the past as the flagship fund managed to generate average annual returns of about 40% in the past five years, as reported by Business Insider. With this return rate, Wood expects the returns to grow four times from current levels over the next five years.
Some of the prominent stocks in Cathie Wood’s portfolio are Tesla, Inc. (NASDAQ:TSLA), Twitter, Inc. (NYSE:TWTR), Shopify Inc. (NYSE:SHOP), and Spotify Technology S.A. (NYSE:SPOT).
However, in this article, we will focus on artificial intelligence stocks in ARK Investment Management’s 13F portfolio as of Q3.
Cathie Wood of ARK Investment Management
Our Methodology:
The stocks mentioned below are the companies that deploy AI technologies in their operations. For this list, we took into account ARK Investment Management’s 13F portfolio for Q3.
Artificial Intelligence Stocks in Cathie Wood’s Portfolio
10. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 62
Peloton Interactive, Inc. (NASDAQ:PTON) is an American exercise equipment and media company that utilizes artificial intelligence technology to improve its customer experience. In Q3 2021, Cathie Wood’s ARK Investment Management increased its stake in the company by 3%, and now holds a stake worth roughly $150 million. Peloton Interactive, Inc. (NASDAQ:PTON) represented 0.36% of Cathie Wood’s portfolio.
The number of hedge funds having stakes in Peloton Interactive, Inc. (NASDAQ:PTON) decreased in Q3, mainly due to post-Covid decline and slow revenue growth. In the third quarter, 62 hedge funds tracked by Insider Monkey reported owning stakes in the company, down from 67 in the previous quarter. These stakes hold a consolidated value of $4.63 billion.
Recently, Deutsche Bank initiated its coverage on Peloton Interactive, Inc. (NASDAQ:PTON) with a Buy rating and a $76 price target, citing the hybrid work model post-pandemic. In Q3, the company earned $805 million in revenue, up 6.2% from the prior-year quarter.
Like Tesla, Inc. (NASDAQ:TSLA), Twitter, Inc. (NYSE:TWTR), Shopify Inc. (NYSE:SHOP), and Spotify Technology S.A. (NYSE:SPOT), Peloton Interactive, Inc. (NASDAQ:PTON) is also one of the notable stocks in Cathie Wood’s portfolio of Q3.
Carillon Tower Advisers mentioned Peloton Interactive, Inc. (NASDAQ:PTON) in its Q2 2021 investor letter. Here is what the firm has to say:
“Peloton Interactive operates a connected fitness platform offering live and on-demand classes allowing users to exercise at home. The firm’s shares were pressured in the quarter after Peloton announced a voluntary recall for both its legacy treadmill (Peloton Tread+) and its newly-launched base model treadmill (Peloton Tread). The issue surrounding the latter is somewhat troubling, as it appears it may be the result of an engineering flaw. This new treadmill offering was expected to be a key growth driver in the second half of 2021, and this development reduces our confidence in Peloton’s product pipeline. Therefore, we sold the stock.”
9. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 66
JD.com, Inc. (NASDAQ:JD), a Chinese e-commerce company, uses AI, big data, and robotics to connect consumers with commerce. The company’s most advanced robots work in its warehouses.
Acknowledging the company’s competent management in supply chain and logistics infrastructure, Macquarie resumed its coverage on JD.com, Inc. (NASDAQ:JD) in December, with an Outperform rating and a $112 price target. In its Q3 report, the company posted an EPS of $0.49, beating consensus by $0.17. ARK Investment Management started investing in JD.com, Inc. (NASDAQ:JD) during Q1 of 2018 with a $47,100 worth of stake. In Q3 2021, the company represented 0.41% of Cathie Wood’s portfolio.
Tiger Global Management LLC held the largest stake in JD.com, Inc. (NASDAQ:JD) in Q3, worth roughly $3.7 billion. Overall, 66 hedge funds tracked by Insider Monkey held positions in the company, compared with 76 in the previous quarter. These stakes are valued at over $9.05 billion.
Argosy Investors mentioned JD.com, Inc. (NASDAQ:JD) in its Q3 2021 investor letter. Here is what the firm has to say:
“We sold JD as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”
8. CareDx, Inc (NASDAQ:CDNA)
Number of Hedge Fund Holders: 29
CareDx, Inc (NASDAQ:CDNA) is an American precision medicine company. Earlier this year, the company, along with its partner Organx, announced the development of advanced analytics and AI technologies to improve organ transplant outcomes.
As per Insider Monkey’s data for Q3, 29 hedge funds tracked by Insider Monkey were bullish on CareDx, Inc (NASDAQ:CDNA), up from 28 in the previous quarter. These stakes are valued at roughly $638 million.
As of Q3, ARK Investment Management holds over 3.4 million shares in CareDx, Inc (NASDAQ:CDNA), which represents 0.51% of the hedge fund’s 13F portfolio. In Q3, the company posted an EPS of $0.07, beating the estimates by $0.05. Moreover, CareDx, Inc (NASDAQ:CDNA) earned $75.5 million in revenues, up 41.6% from the prior-year quarter. As the company modestly topped analysts’ estimates in Q3, Raymond James, recently, set a $90 price target on CareDx, Inc (NASDAQ:CDNA), while maintaining a Strong Buy rating on the shares.
In addition to Tesla, Inc. (NASDAQ:TSLA), Twitter, Inc. (NYSE:TWTR) and Shopify Inc. (NYSE:SHOP), CareDx, Inc (NASDAQ:CDNA) is a notable growth stock in Cathie Wood’s portfolio.
Baron Funds published its Q3 2021 investor letter in November and mentioned CareDx, Inc (NASDAQ:CDNA) in it. Here is what the firm has to say:
“CareDx, Inc. provides transplant testing and ancillary services. The company reported strong second quarter earnings (it beat and raised full-year guidance), driven by its kidney and heart transplant tests. It also is moving forward with studies on more transplant tests (liver, stem cell/bone marrow transplant, cell transplant, and lung). We believe the weak share price performance was related to noise surrounding a competitor’s heart transplant test study that purported to be more accurate than CareDx’s test. While the headline number looks better for the competitor, it is important to note that CareDx’s Heart Care combination test, which includes both donor-derived DNA and gene expression testing, is comparable to the competitor’s accuracy. Also, while the full publication has not yet been released, it appears that the competitor’s testing results are from retrospective (looking back) as opposed to prospective (blind and forward looking) patient results. So, this may not be a fully “apples-to apples” comparison. The same competitor has previously had similar test data and a competitive product launch in kidney (by far the largest revenue producer for CareDx) but has still failed to garner meaningful share. CareDx has proven itself to be a terrific long-term partner to its customers, providing not only tests, but services to transplant centers and their patients which creates brand stickiness, and therefore competitive advantage beyond pure testing. We are not concerned by the short-term dip in the share price as CareDx still has significant market opportunity in kidney, heart, and all of its pipeline products.”
7. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 51
An American e-signature company, DocuSign, Inc. (NASDAQ:DOCU) uses a proven combination of AI technologies, such as machine learning and natural language processing, to offer a digital signature product for electronic agreements. Recently, owing to the company’s solid recovery post-pandemic, Oppenheimer set a $250 price target on DocuSign, Inc. (NASDAQ:DOCU), while maintaining an Overweight rating on the shares.
In Q3 2021, the company accounted for 1.12% of Cathie Wood’s portfolio, as her hedge fund holds a stake worth roughly $469 million. In Q3, DocuSign, Inc. (NASDAQ:DOCU) posted an EPS of $0.58, beating the estimates by $0.12.
At the end of Q3 2021, 51 hedge funds in Insider Monkey’s database reported holding stakes in DocuSign, Inc. (NASDAQ:DOCU), down from 58 in the previous quarter. The total value of these stakes is over $4.23 billion. Among these hedge funds, Tiger Global Management LLC was the company’s leading shareholder in Q3, holding a stake worth $1.88 billion.
Carillon Tower Advisers mentioned DocuSign, Inc. (NASDAQ:DOCU) in its Q2 2021 investor letter. Here is what the firm has to say:
“DocuSign provides electronic signature solutions. The firm reported an excellent quarter and investors have appreciated the strong growth combined with the excellent margins the company has posted. DocuSign has a long runway of growth ahead and we believe that it remains in a favorable position to continue gaining market share from traditional manual and paper-based signature solutions.”
6. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders: 94
Twitter, Inc. (NYSE:TWTR), an American microblogging and social networking service, uses an AI algorithm to increase engagement on its tweets. In Q3 2021, the hedge fund interest in Twitter, Inc. (NYSE:TWTR) spiked, as 94 hedge funds tracked by Insider Monkey were bullish on the company, up from 89 in the previous quarter. These stakes hold a consolidated value of over $6.3 billion, compared with $6 billion in the previous quarter.
ARK Investment Management bought 1.1 million shares of Twitter, Inc. (NYSE:TWTR) in Q3, taking the total to 13.7 million shares. This marks the hedge fund’s biggest one-day purchase of the company since July. Twitter, Inc. (NYSE:TWTR), currently, accounts for 1.99% of Cathie Wood’s portfolio. In Q3, the company reported revenue of $1.28 billion, while its advertising revenue stood at $1.14 billion, presenting a 37% and 41% year-over-year growth, respectively.
Recently, Morgan Stanley appreciated Twitter, Inc. (NYSE:TWTR) for its strong marketing business and raised its price target to $62, which implies a 31% upside. The firm kept an Equal Weight rating on the shares. Along with ARK Investment Management, Lone Pine Capital was also one of the company’s leading shareholders, owning a stake worth $1.3 billion.
Twitter, Inc. (NYSE:TWTR) is also favored by investors and analysts like Tesla, Inc. (NASDAQ:TSLA), Shopify Inc. (NYSE:SHOP), and Spotify Technology S.A. (NYSE:SPOT).
Greenwood Investors LLC mentioned Twitter, Inc. (NYSE:TWTR) in its Q3 2021 investor letter. Here is what the firm has to say:
“Being entrepreneurial, by definition, means taking the path untraveled, and heading into the unknown with daring boldness. Offense playbooks, by design, must take competition by surprise. Coming from a humble place with brands and companies that were ridiculed by competitors, when Sergio put medium-term plans out to the market, they were not timid. He would always aim higher than anyone, especially his competitors, believed he and his team could reach. And while not every target was always achieved, the formidable results speak for themselves.
This past earnings season, as Twitter was the only social media company to deliver on guidance while also confirming the quarter ahead to be at least as good, the stock sold off materially as its monetizable daily active user (MDAU) targets in the medium-term were called into question. While founder Jack Dorsey is clearly unafraid to look foolish to the public, or even in front of congress, he also manages multiple businesses at the same time. Competitors openly make fun of him. But his team is exceptionally loyal to him, and they have set out very ambitious targets for themselves over the next few years. The recent sell-off in Twitter shares was like deja vu all over again, as I reminisced about the Fiat capital markets day in 2014, fittingly on Twitter in this tweet thread. With its product and revenue servers rebuilt, it can now innovate and launch new ad formats faster than ever before. We look forward to the Twitter team pressing its offense strategy as a major peer loses focus on its core business.”
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Disclosure. None. 10 Artificial Intelligence Stocks in Cathie Wood’s Portfolio is originally published on Insider Monkey.
