META or AMD: Cathie Wood Doubles Down on One Top AI Stock

Influential investor Cathie Wood has never been one to follow the crowd, and the past two trading sessions offered another example of that approach in action. As Meta Platforms (NASDAQ:META) tumbled after its Q1 report, weighed by heavy spending to build out its AI ecosystem, and Advanced Micro Devices (NASDAQ:AMD) extended its rally on continued enthusiasm around AI, the Ark Invest founder leaned into her contrarian playbook.

Wood stepped in to buy the dip in Meta on Thursday, scooping up 47,201 shares across her ETFs, a position valued at nearly $29 million. At the same time, she trimmed 208,438 shares of AMD over the past two sessions, even as the stock kept climbing, up 71% over the past month and 273% over the past year.

Wood’s move on META will make sense to Goldman Sachs analyst Eric Sheridan. The downbeat reaction to the print was due to the company signaling additional AI-related investment is on the way. As such, Sheridan expects that over the near term, investors will be looking for signs the AI investments are starting to generate tangible returns. There is also likely to be continued attention on whether the company can maintain strong revenue growth alongside stable operating margins and free cash flow, which would help build confidence in both the scale and duration of its current investment cycle.

However, the long-term favorable thesis remains intact. Sheridan notes that management still appears firmly centered on the “core building blocks” of growth, building on the operating framework established over the past 12+ months.

“We continue to frame META as well-positioned against several long-term secular growth themes and are encouraged by the positive momentum across key product initiatives incl. Reels, click-to-messaging Ads, and AI including Advantage+ adoption of advertising budgets,” Sheridan said.

To that point, Sheridan rates META stock a Buy and sets an $830 price target, suggesting about 36% upside in the months ahead. (To watch Sheridan’s track record, click here)

The Street generally agrees with that take, rating META a Strong Buy, based on a mix of 31 Buys vs. 7 Holds. At $826.66, the average price target offers a 12-month upside of ~36%. (See Meta stock forecast)

As for Wood’s decision to offload a chunk of her AMD holdings, that move gets the thumbs up from Northland’s Gus Richard, an analyst ranked among the top 2% on Wall Street, who last week downgraded his AMD rating from Outperform (i.e., Buy) to Market Perform (Neutral), while his $260 price target points to a 12-month decline of 28%. (To watch Richard’s track record, click here)

Richard’s change of heart reflects both AMD’s huge runup and shifting market conditions. The analyst notes that when he first initiated coverage of AMD 11 years ago with an Outperform rating, the call was widely doubted. At that point, AMD was still in catch-up mode vs. Intel, while Intel itself was losing ground to TSMC. Today, Intel is working to close the gap with AMD, while TSMC has deepened its strategic ties with Nvidia, particularly across AI infrastructure and PCs.

“We think this limits AMD’s GM expansion, and R&D spending will likely remain elevated. While AMD is a phenomenal Company, the CY27 consensus is likely too high,” the 5-star analyst summed up.

8 other analysts join Richard on the sidelines, although with an additional 18 Buys, the stock claims a Moderate Buy consensus view. That said, the average price target stands at $300.46, a figure that sits ~17% below the current share price. With this in mind, watch out for either price target hikes or rating downgrades shortly. (See AMD stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.