The market has been turbulent in recent weeks, with broader concerns plaguing investors. Others are concerned about the valuation of artificial intelligence (AI) stocks and whether these players will live up to expectations. Investors have also questioned the state of the economy and are waiting for more clarity on the pace of interest rate cuts. Finally, the conflict in Iran has added to market uncertainty, and as a result, the S&P 500 has swung from gains to losses multiple times in a short period of time.
Against this background, it is impossible to predict how even high-quality stocks will move in a matter of days or weeks. But if you’re a long-term investor, it’s a very good idea to go buy stocks during tough times. Investing for the long term, or holding onto a stock for at least five years, is a sure ticket to a winning investment. That’s because it gives you time to accompany the company through its growth story — and time will limit the impact of the down markets you experience along the way. At that time, when the stocks fall, you can get into them at good prices.
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Cathie Wood, founder and CEO of Ark Invest, knows this, which is why she often buys aggressively when others flee the market. Wood likes long-term investments and bets on founders in all industries, from mainstream technology to biotech, autonomous vehicles, and more. Let’s examine two stocks he recently bought after the recent tech pullback.
On March 3, Wood added more shares CoreWeave (NASDAQ: CRWV) in his flagship Ark Innovation a bag. This company is the 21st largest, with a weight of 1.8%, out of a total of 45 positions. This is after CoreWeave stock fell 14% in February.
CoreWeave is a perfect fit with Wood’s focus on innovation. The company is a key player in the AI landscape as it provides clients with advanced recruiting capabilities Nvidia graphics processing units (GPUs) for their AI load. Power is in high demand right now as companies rush to embrace AI — and many don’t have the resources, time, or need to build their own infrastructure. So they rushed to CoreWeave for their projects, which led to a huge increase in the company’s revenue.
I would expect this to continue as we are in the early stages of AI actually being applied to real world problems, and as it is used this way more, CoreWeave may benefit. GPUs are necessary for AI models to do their work, so companies will continue to need access to this computing.
All of which means there could be plenty of bright days ahead for this founder — and shareholders.
Wood added to him Amazon (NASDAQ: AMZN) his position on March 3 and March 4, buying shares in Ark Innovation and four of its other funds. Amazon is ranked 20th in Ark Innovation, with a weight of 1.9%.
Amazon is another company that is already winning from the AI boom, as both a user and seller of AI. An e-commerce business uses this technology to gain efficiency, help consumers, and more. For example, AI helps Amazon choose the fastest delivery routes, saving time and money. And Amazon Web Services (AWS), the company’s cloud business, is a leading provider of AI products and services. This has helped the division reach an average annual revenue of $142 billion. Amazon recently announced that as it opens up new capacity, it is able to make money quickly.
AWS is the world’s leading cloud provider, and this existing customer base should position it well to continue to gain business in the AI space. Meanwhile, AWS continues to deliver growth from non-AI contracts — so it doesn’t rely solely on AI.
Today, Amazon trades at a multiple of 28x forward earnings after the recent dip, so it’s no surprise that Wood is poaching for this big price.
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Adria Cimino has positions in Amazon. The Motley Fool has positions and recommends Amazon and Nvidia. The Motley Fool has a policy of disclosure.
Cathie Wood Goes Bargain Hunting: 2 AI Stocks She Recently Bought After Tech Pullback was first published by The Motley Fool
