We recently compiled a list of the Cathie Wood’s Stock Portfolio: 2025 Stock Picks. In this article, we are going to take a look at where Robinhood Markets, Inc. (NASDAQ:HOOD) stands against the other stocks in Cathie Wood’s portfolio.
Cathie Wood is one of Wall Street’s most contentious figures. She founded ARK Investment Management around ten years ago and has over three decades of experience in the financial sector, including a notable spell as chief investment officer of AllianceBernstein Holding LP’s global thematic strategies unit. An 87.4% return in the fund, driven by a 1300% growth in Grayscale Bitcoin Trust, made it one of the fund’s best years since its debut in 2017. This performance came about at a time when Bitcoin’s price had reached a record high of $20,000.
Cathie Wood’s investing strategy is pretty straightforward: her ARK ETFs invest in developing high-tech firms in artificial intelligence, blockchain, medicinal technology, and robotics. Wood believes these firms can transform sectors, but their volatility causes significant fluctuations in ARK’s valuations. Although supporters of Wood hail her as a tech visionary, her detractors call her a run-of-the-mill fund manager. Additionally, despite achieving a 153% return in 2020, her long-term performance has raised questions regarding the viability of her high-risk, high-reward investment style. With $6,269 million under management, the ARK Innovation ETF has returned an annualized 14.24% over the last five years and a 12.16% year-to-date. The Nasdaq Composite, on the other hand, has an average return of 106.84% over five years.
Big Ideas 2025
Following recent changes in technology markets, Cathie Wood and her ARK research team released the yearly blockbuster report “Big Ideas 2025.” Wood seems optimistic about the future of AI computing power and AI agents. She added that from the dawn of artificial intelligence in 2018, computer performance has multiplied 40 times, and by 2023, it will have exceeded 48 times. Computing performance is predicted to hit a new high by the end of this century, mainly due to the rapid growth of AI. Specifically, Cathie Wood believes that AI agents are the central subject of future development, with the potential to accelerate the adoption of digital applications and spark unfathomable changes in human-computer interaction. Narrowing it down to specific industries, these agents will also press for an increase in the use of digital wallets in e-commerce. According to ARK research, digital wallets powered by AI purchasing agents are gaining market share from traditional payment methods such as credit and debit cards, with digital wallets anticipated to account for 72% of all e-commerce transactions by 2030.
Our Methodology
For this article, we scanned ARK Investment Management’s Q3 portfolio and chose its top 15 stock picks. The stocks are ranked in ascending order of the fund’s stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A successful business person confidently managing their finances on a mobile device.
Robinhood Markets, Inc. (NASDAQ:HOOD)
ARK Investment Management’s Q3 Stake Value: $420.9 million
Number of Hedge Fund Holders: 36
Robinhood Markets, Inc. (NASDAQ:HOOD) is a California-based financial services company that uses a mobile app to provide commission-free trading of stocks, exchange-traded funds, and cryptocurrencies, as well as administration of individual retirement plans.
KeyBanc Capital Markets increased its price target for Robinhood Markets, Inc. (NASDAQ:HOOD) shares from $50 to $57 while maintaining an Overweight rating on January 30. Alex Markgraff, a KeyBanc analyst, acknowledged that the company’s Gold Card is in high demand and that its Gold membership plan is gaining popularity. The study, which included questions about the company’s future goals, revealed an unexpected interest in futures trading, which is set to begin in 2025. Despite the hopeful outlook, the poll findings showed a modest decrease in the desire to create retirement savings accounts.
Robinhood Markets, Inc. (NASDAQ:HOOD) had another excellent quarter in fiscal Q3 2024, recording its second-highest revenues to date. Adjusted EBITDA increased by 96% over the previous year, while total revenues grew by 36%.
ClearBridge Growth Strategy stated the following regarding Robinhood Markets, Inc. (NASDAQ:HOOD) in its Q4 2024 investor letter:
“Additionally, we purchased Robinhood Markets, Inc. (NASDAQ:HOOD), an established disruptor in retail brokerage with a brand that resonates across younger cohorts. The company ushered in the era of commission-free trading by leveraging payment for order flow from market makers and also generates revenue from cryptocurrency transactions. While currently maintaining only about 1% market share of self-directed assets, Robinhood is taking share in a large, secularly growing industry. Robinhood should significantly benefit from the upcoming change in administration with reduced regulatory risk around payment-for-order flow and the potential for policies supportive of cryptocurrency to create a runway for new growth opportunities.”
Overall HOOD ranks 6th on our list of Cathie Wood’s top stock picks for 2025. While we acknowledge the potential of HOOD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HOOD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
