Cathy Wood isn’t buying the artificial intelligence hype at Nvidia (NVDA).
Founder of Arc Invest, and renowned technology innovation investor, Tweeted AI darling on Monday is now at a higher price.
“Since 2014, @ARKInvest Nvidia believes that it saw the future of AI before other chip companies, and now we believe that it will continue the age of AI. However, at 25 times expected earnings this year, $NVDA Priced ahead of the curve,” Wood tweeted.
Nvidia shares have risen more than 30% since the company reported earnings on May 24, and the stock hit a $1 trillion market cap on Tuesday.
Wood and Ark sold their stake in Nvidia in January. Shares of Nvidia more than doubled as investors called the company the clear leader in the AI chipmaking arms race. Last week, Nvidia announced earnings guidance that blew away Wall Street estimates and followed that news with new AI-focused product launches.
It did not raise Nvidia stock. On Friday, Marvell Technology ( MRVL ) said it expects revenue attributable to AI to double next year. Shares jumped more than 30% on the news amid a broader AI-infused technology rally that continued into Monday’s trading session.
With the Nasdaq Composite (^IXIC) now up more than 2.5% over the past five days, Wood argues that there are going to be other winners in the AI space outside of Nvidia.
Other companies with visionary leaders, strong global distribution and, most importantly, large high-quality pools of proprietary data should be large. #AI “Winners, revenues and earnings surprise significantly on the high side of expectations in the coming years,” Wood tweeted.
According to Wood, there will be “dozens” of AI winners. But the standout for Arc is Tesla ( TSLA ).
At six times earnings, Wood argues that Tesla stock is much cheaper than Nvidia’s current valuation of 25 times earnings.
“(Tesla) is the most obvious beneficiary of recent developments #AIIt is targeting a revenue TAM of $8-10 trillion in autonomous driving by 2030,” Wood wrote.
Tesla shares rose more than 7% amid a broader tech rally, with several positive headlines in the news of late, including a growing relationship in China.
Wood’s Nvidia comments come as his flagship ETF, Arc Innovation Fund ( ARKK ), struggles to return to its epidemic dominance. The ETF soared during the risk-on bull market of 2020 with high-flying contagions like Tesla, Zoom ( ZM ) and Nvidia.
But riskier bets have become less popular with investors as the Federal Reserve embarks on its most aggressive interest rate hike campaign in four decades. Some of Arc’s top holdings, such as Zoom, Roku (ROKU) and Coinbase (COIN), are well off their epidemic peaks.
The fund itself has lost more than $1 billion in market capitalization, with shares falling nearly 67% in 2022.
Josh is a Yahoo Finance reporter.
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