ARKK - Is Cathie Wood Giving Up on Nvidia (NVDA) Stock?

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Cathie Wood’s Ark Invest has been one of the most controversial tech stock bellwethers on the market. The investment firm and Wood herself have experienced significant criticism in 2022. The year stood in stark contrast to rip-roaring 2021. But, it appears that she has reclaimed her footing as 2023 presses on. With investors beginning to flock back to her side, though, they are seeing Ark trim down some very popular holdings — notably, Nvidia (NASDAQ:NVDA) stock. This begs the question of whether Wood is giving up on the computing colossus.

Much of the reason for Wood’s falling out of the limelight last year was not of her own doing. The Federal Reserve’s rate hikes have been more than a heel to the tech industry — they’ve kept the entire market under its thumb. Being an investor who deals solely in speculative, ground-breaking companies, her exchange-traded funds (ETFs) were fighting an uphill battle.

We don’t seem much closer to the end of this tightening by the Fed, and inflation continues to strangle much of the economy. However, investors have decided to assume a bullish attitude going into the new year, and a resurgence in tech stocks has allowed Wood to step back into the mainstream of investing.

She is helped along greatly by both her own and others’ willingness to dive headfirst into artificial intelligence (AI). The nascent technology has been thrust into the spotlight by projects like OpenAI’s ChatGPT bot and the Jasper generative art tool. The widespread appeal and endless prospects for these AI products and others have created an obvious theme for 2023 in tech. But, there’s one stock Wood isn’t biting, regardless of its upward trajectory.

Cathie Wood Shedding NVDA Stock Holdings

NVDA stock has been a favorite for investors in recent months, especially after the signing of the CHIPS Act. The company is going to be benefitting from the production boost in the U.S. there, but even more helpful is the industry pivot toward AI. As a company that develops both AI hardware and software, it seems Nvidia is primed for a big year. But Wood doesn’t seem to think so.

Over the end of 2022 and into 2023, Wood’s Ark Invest has been paring down its once-sizable NVDA holdings. From October through December, Ark Invest sold off more than 859,000 shares of the stock across its portfolio. In 2023, investors have seen more of this dumping. In early January, the firm’s flagship Ark Innovation ETF (NYSEARCA:ARKK) dumped what little NVDA stock it maintained. The Ark Next Generation ETF (NYSEARCA:ARKW) has followed suit, dumping more of its NVDA, yet it maintains a holding of just over 80,000 shares. Ark Autonomous Tech & Robotics ETF (NYSEARCA:ARKQ) stands out as the largest Ark ETF by NVDA holding. Currently, it holds over 105,000 shares.

While Ark sheds NVDA with urgency, the stock continues to climb. Nvidia has been on the up-and-up in terms of price since October of last year. In 2023 alone, it added more than $60 to its price. So, why is Wood turning her back on the tech star?

Simply put, it seems she is looking to other venues for AI innovation. In Ark’s “Big Ideas 2023” showcase, Ark leaders professed a deep interest in AI going into the year. The firm believes it to be a major catalyst for all tech going forward, “cascading through all other technologies.” As InvestorPlace contributor Muslim Farooque points out, though, Ark is gravitating more toward companies like C3.ai (NYSE:AI) and UiPath (NYSE:PATH).

This isn’t to say Wood’s never coming back to NVDA. A big-picture view shows that she has come and gone from NVDA in the past. If anything, her habit of buying NVDA is almost as frequent as her habit of selling it nowadays. Only time will tell, but she could very well come back into the stock down the line.

On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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