Cathie Wood Sells Nvidia Stock, Favors AI Software Over Semiconductor Hardware

Cathie Wood continues to reduce her stake in Nvidia, a semiconductor company at the heart of the artificial intelligence (AI) boom, drawing attention.

Cathie Wood, CEO of Ark Invest, appeared on the Wall Street Journal (WSJ) podcast on the 18th (local time) and said, “We have been selling Nvidia for a long time,” adding, “We believe that when AI hardware is sold for $1, an additional $10 will be sold in AI software.”

She explained, “Many people perceive Nvidia as a key player in the semiconductor field, and in some ways, it could be seen as having created the AI era,” but “we believe that the inventory has already been met, and, surprisingly, expectations are high.”

She observed that Nvidia’s stock price has climbed beyond $700, marking it as a notably cyclical stock. Wood drew parallels between the current situation and the surge associated with the cryptocurrency movement in 2017. She stressed her cautious approach towards investing, particularly when a rush to buy is driven by excess behavior, indicating her preference to withdraw from such stocks under those circumstances. Furthermore, Wood highlighted her concerns over the unrealistic expectations for the stock, suggesting they are too lofty to be met.

Cathie Wood has stated that major companies such as meta-platforms, Amazon, and Alphabet, the latter being Google’s parent company, are developing their own AI chips. She noted that These chips are designed to be more specialized and purpose-specific than those offered by other companies. In her view, Nvidia maintains a more generalized approach in the market. Wood further emphasized the burgeoning reality of the AI boom, positioning Nvidia as the current frontrunner in this rapidly evolving field. However, she cautioned that Nvidia would likely encounter increased competition as the sector expands.

Cathie Wood was born in 1955 and majored in economics at the University of Southern California. She worked as an assistant economist at Capital Group and was the Chief Investment Officer (CIO) at Alliance Bernstein (AB) for 12 years. She founded Ark Invest in 2014.