Adam Spatacco, The Motley Fool
5 min read
In This Article:
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Cathie Wood's Ark Invest exchange-traded funds focus heavily on emerging technology themes such as artificial intelligence, cryptocurrencies, renewable energy, and data analytics.
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While Ark has built major positions in numerous AI stocks, Wood revealed recently that Tesla is her highest-conviction holding.
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In her view, Tesla is uniquely positioned to benefit from AI through autonomous vehicles and robotics -- markets that could be worth trillions of dollars.
Cathie Wood is the founder and chief investment officer of Ark Invest, which manages exchange-traded funds (ETFs) focused on themes such as biogenetics, artificial intelligence (AI), robotics, renewable energy, and cryptocurrencies.
While stocks such as Palantir Technologies, Robinhood, and Archer Aviation comprise some of the largest positions in Ark's portfolios, Wood recently revealed her highest-conviction pick. During an interview on The Diary of a CEO podcast, she said that if she could only invest in one stock, it would be Tesla (NASDAQ: TSLA), which is one of Ark's longest-standing positions and the top holding across all of its ETFs.
Let's dig into why Tesla has earned so much confidence from Wood. From there, I'll dig into how Tesla is disrupting several pockets of the AI realm and assess the company's valuation to help determine if the stock is a good buy right now.
During the interview, Wood described Tesla as a "convergence" across three arenas that Ark targets across its investments: robotics, energy storage, and AI.
For much of its history, Tesla focused on two core segments: electric vehicles and energy storage. While these two opportunities remain enormous, AI is the pillar supporting its growth narrative.
The first layer of Tesla's AI ambitions involves autonomous driving technology, which the company could market to both businesses and consumers. For example, self-driving functionality would be a big value-adding amenity for buyers of Teslas, which could help it maintain its differentiation in a crowded and commoditized automobile market.
The more lucrative opportunity when it comes to autonomous vehicles is connected to Tesla's plan to build a fleet of robotaxis. That could potentially send shock waves across markets from ride-hailing to car rentals to delivery services.
Wood is particularly bullish on Tesla's robotaxi project. During her interview, she clarified that Ark's $2,600 five-year price target on Tesla stock doesn't even account for the company's potential successes in other areas of AI that it's focusing on, such as robotics.
