Key Points
- Ark Invest's internet fund buys Microsoft shares for the first time.
- Microsoft's investment in ChatGPT leads to bullish views from analysts.
- Cathie Wood has previously criticized the Nasdaq 100 but has now invested in one of its top heavyweights.
- The ARK internet fund has had a strong year, returning 31% as of the end of February.
- Cathie Wood's interest in AI continues with the latest investment move.
Cathie Wood’s Ark Next Generation Internet ETF (ARKW) has just made its first foray into Microsoft stocks, in a move that may signal her taking notice of the latest buzz around ChatGPT.
The fund invested over $11 million in the tech giant, purchasing 40,957 shares on Monday. While Ark’s 3D printing fund already owns Microsoft shares, this marks the first time the internet-focused ETF has bought the stock.
The Decision about AI
This decision may be due to Microsoft’s recent investment in OpenAI, which is behind the AI tool ChatGPT that has captured the market’s imagination. Microsoft invested $10 billion into OpenAI, leading analysts to make bullish predictions for the company’s stock. Credit Suisse expects Microsoft to generate $40 billion in revenue over the next five years thanks to the investment.
It’s not the first time Wood has extolled the benefits of AI. She believes it has the potential to increase global labor productivity, and may have seen the potential of ChatGPT for herself. However, it’s noteworthy that she’s investing in a company she has criticized in the past. Wood has been a vocal critic of the Nasdaq 100, saying it no longer gives exposure to disruptive innovation. Microsoft is one of the top heavyweights in the index.
Despite her reservations, the ARK internet fund has returned 31% as of the end of February, with the ETF’s price up around 40% this year alone, after a difficult 2022 where it lost 68%. This is a sign of the resilience of the fund, and perhaps that Wood is willing to make moves she hasn’t in the past.
Ark Investment Profile
It’s interesting to see how Ark’s investment strategy has shifted over time. The fund has always been focused on high-growth, high-risk tech companies, but its holdings have changed in response to market trends. In the past, the fund has been heavily invested in companies such as Tesla, Roku, and Zoom, which are all disruptors in their respective markets.
Microsoft is more established, and while it’s been a mainstay in the tech industry for years, it’s not typically thought of as a disruptor. However, its investment in OpenAI and the development of ChatGPT may be enough to catch Wood’s eye.
It’s worth noting that ChatGPT has garnered a lot of attention from investors recently. The AI tool uses machine learning to generate human-like language, which has wide-ranging applications from chatbots to content creation. While it’s still early days for ChatGPT, the potential is there for it to be a game-changer in the AI industry. As more companies invest in the technology, it’s possible that ChatGPT will become the standard in AI language generation.
All in all, it’s clear that Wood is still a believer in disruptive innovation, and is willing to make moves that may contradict her past statements. Her investment in Microsoft may be a sign that she’s paying attention to new developments in the tech industry, and sees potential in the company’s AI investments.
It’s clear that Ark’s investment strategy is flexible, and they’re not afraid to make changes when necessary. With ChatGPT on the rise, it’s possible that we’ll see more funds investing in Microsoft and other companies focused on AI and machine learning. Only time will tell whether this investment pays off, but it’s clear that Wood is still a force to be reckoned with in the tech industry.
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