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Cathie Wood acquired shares in Taiwan Semiconductor, Oklo, and Pony AI on Friday.
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Despite a slowdown, TSMC’s profitable model still warrants a strong market valuation.
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Oklo has gained traction as an energy play linked to the AI revolution, though revenue won’t materialize until next year.
Cathie Wood wasn’t slowing down as the holiday season approached. The CEO and co-founder of Ark Invest actively shares her daily trades from the aggressive growth ETF she manages. Last Friday was particularly busy for her.
Ark invested more in Taiwan Semiconductor Manufacturing, Oklo, and Pony AI by the end of last week. These were part of eight positions that Wood bolstered that day. Let’s dive deeper into these three investments.
Though not a household name, Taiwan Semiconductor Corporation is recognized by many, especially if you own devices like an iPhone or a tablet that likely incorporates TSMC technology.
As the largest foundry, TSMC has a market cap nearing $1.8 trillion, making it the sixth most valuable company on U.S. exchanges. Its stock has surged 65% over the last year, outperforming all but one of the Magnificent Seven. While the stock’s performance is impressive, TSMC remains somewhat overlooked in broader market discussions.
Recently, TSMC reported earnings, and stock prices rose after exceeding expectations. The fourth-quarter revenue increased by 21%, reaching $33.7 billion. Analysts were anticipating growth in the mid-to-high teens. This shift marks a slowdown compared to previous years, but it’s still a solid figure, especially since they’ve seen over 30% year-on-year growth in three out of the last four years.
Additionally, TSMC outperformed Wall Street’s profit forecasts, maintaining a strong profit margin of over 30% for an impressive 22 years. Last year, the company achieved a record net profit margin of 45.1%, indicating significant profitability with $457.10 generated for every $1,000 in revenue.
The stock has ballooned nearly fourfold this past year, but Oklo, on the other hand, isn’t predicted to generate revenue until next year and won’t post an annual profit for at least another four years. What sets Oklo apart is its cutting-edge nuclear fission and recycling technology aimed at providing efficient and eco-friendly energy, which aligns well with today’s tech demands.
Sam Altman, known for his role at OpenAI and as Oklo’s former chairman, significantly influenced their direction in energy innovation. Although he stepped down nine months ago, interest from investors remains strong. Transferring leadership to co-founder Jacob DeWitt seemed a strategic move to avoid conflicts of interest, which could be beneficial for future collaborations within the expanding field of AI.
Pony AI plays a crucial role in the evolving self-driving car market, particularly in China, where such technologies are gaining traction. Having gone public at $13 just over a year ago, this stock has seen considerable fluctuations, reaching highs of $24.92 and lows of $4.11. Currently priced at $16.20, that marks a 25% rise from its initial price.
Right now, Pony AI’s revenue stands at $96.4 million, but analysts project rapid growth, expecting sales to reach $261 million next year and potentially $1.5 billion by 2029.
As the market evolves rapidly, Pony AI’s $7 billion market capitalization may fit well within future growth expectations.
Before deciding to invest in Taiwan Semiconductor Manufacturing, keep the following points in mind:
According to the Motley Fool’s Stock Advisor, their analysts believe there are better options to consider, as Taiwan Semiconductor Manufacturing doesn’t appear on their list of recommended stocks for impressive potential returns over the coming years.
Reflecting on past recommendations shows significant gains: investing in Netflix or Nvidia at their recommendation points would have yielded remarkable returns today. The Stock Advisor boasts an average return of 955%, significantly outperforming the S&P 500’s 196%.
