Cathie Wood is diving back into the tech sector, even as some investors are getting cold feet.
On February 17th, ARK disclosed investments of $8 million in Broadcom (AVGO) and around $6 million for Advanced Micro Devices (AMD). This totals to $14 million in the two major companies. Interestingly, this decision comes shortly after a significant market downturn that caused quite a stir.
Wood’s timing is intriguing, especially considering the current skepticism surrounding AI investments.
In recent weeks, the S&P 500 dropped by 2%, with Barron’s highlighting a decline of around 4% for the Nasdaq. This, notably, keeps the index below its recent peaks. It seems tech investors are entering a “show-me” mindset with AI stocks, questioning whether the enthusiasm is truly justified.
However, AI expenditure keeps surging.
Forecasts suggest that major players like Microsoft, Alphabet (Google’s parent company), Amazon, and Meta could see investments nearing $650 billion for AI infrastructure by 2026, marking a staggering 60% increase from previous estimates, according to Yahoo Finance.
Wood seems confident that the market isn’t quite reflecting the fundamentals here.
Broadcom is a key player in the realm of custom AI silicon for hyperscalers, while AMD is pursuing a comprehensive strategy via its Helios framework, making it a strong choice in high-performance computing.
So, if AI demand continues and cost efficiencies improve, these infrastructure companies might attract renewed interest from investors.
Recent buys
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Broadcom: Acquired 24,205 shares for $8.05 million.
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Advanced Micro Devices: Acquired 30,139 shares for $6.12 million.
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Coinbase: Acquired 41,453 shares for $6.88 million.
Recent sales
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Teradyne: Sold 43,586 shares for $13.32 million, marking the largest deal of the day.
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Twisted Bioscience: Sold 119,374 shares for $6.31 million.
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Airbnb: Trimmed.
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Pinterest: Trimmed.
While companies like Nvidia often take the limelight in the AI sector, Broadcom is strategically positioning itself as a foundational player amidst the rise of AI hyperscalers.
Broadcom specializes in AI ASICs and XPU chips for prominent clients such as Google and Meta, which could help solidify its relevance in the AI market.
Looking towards the future, Broadcom possesses a staggering $73 billion backlog expected over the next 18 months, primarily from a handful of hyperscalers, alongside a notable increase in AI sales.
