Cathie Wood Just Went Bargain Hunting: 2 Artificial Intelligence (AI) Chip Stocks She Just Scooped Up (Hint: Nvidia Isn't One of Them)
Key Points
- Ark Invest has increased holdings in several chip stocks recently.
- Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSMC) are now significant positions in Ark’s portfolio.
- Both companies present interesting opportunities for investors focused on AI.
Cathie Wood, CEO and chief investment officer of Ark Invest, is widely recognized for her bold bets on emerging technologies like genomics and cryptocurrency. When it comes to AI, many of Ark’s top holdings have been volatile names such as Tesla and Palantir Technologies. However, in recent months, Wood has quietly been adding semiconductor stocks to her exchange-traded funds (ETFs).
Let’s examine two AI chip stocks that have gained traction in Ark’s portfolio lately and consider if now is the right time to follow her lead.
1. Advanced Micro Devices (AMD)
AMD has been part of Ark’s portfolio for a while, but the firm ramped up its position aggressively from late April through May. Public trading data shows Ark added roughly 800,000 shares of AMD between June 17 and 30. These shares are spread across multiple Ark ETFs, including the Autonomous Technology & Robotics ETF and the Innovation ETF. As of now, AMD ranks as Ark’s 11th largest holding.
AMD’s strong run in Ark’s portfolio coincides with a notable share price jump of about 61% since late April. This momentum is tied to growth in AMD’s data center business and bullish expectations for its upcoming AI accelerators slated for release later this year.
Despite the recent surge, AMD trades at around 36 times forward earnings, which is within its typical valuation range but not a bargain. Some investors still discount AMD due to the intense competition it faces from Nvidia, the dominant player in the chip space.
Given the current valuation and competitive landscape, it might be prudent to wait for a better entry point before initiating or adding to a position in AMD. The company’s long-term prospects depend heavily on how it competes against Nvidia’s stronghold in AI chips.
2. Taiwan Semiconductor Manufacturing (TSMC)
Alongside AMD, Ark Invest has increased exposure to TSMC. The firm added more than 190,000 shares throughout June after starting purchases in May. TSMC stands out in the chip sector because it focuses on semiconductor manufacturing rather than designing its own chips.
This manufacturing expertise puts TSMC in a unique spot to benefit from growing investments in AI infrastructure, regardless of which chipmakers dominate GPU sales. Essentially, owning TSMC is like holding a stake in the broader AI hardware ecosystem.
TSMC’s valuation has expanded with AI-driven demand but remains reasonable with a forward price-to-earnings (P/E) ratio near 25. Unlike AMD, the main investor concern here isn’t competition but geopolitical tensions, especially related to China.
Despite these concerns, TSMC’s ongoing investments in geographic diversification reduce risk. Many of the geopolitical uncertainties appear priced into the stock already. This combination of strong market position, secular growth in AI infrastructure, and reasonable valuation makes TSMC an attractive long-term holding.
For investors interested in AI and semiconductor stocks, keeping an eye on Ark’s moves with AMD and TSMC may provide useful insights. Both companies have different risk profiles and growth drivers, but each plays a meaningful role in the AI chip supply chain.
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