Cathie Wood has always done things her own way, often appearing out of sync with the general Street view. That willingness to stand apart has defined her reputation as a bold risk taker and contrarian, unafraid to back ideas others might dismiss as far-fetched. From being an early advocate of Tesla and Bitcoin to making big bets on disruptive technologies such as genomics and fintech, the ARK Invest CEO has consistently shown that defying conventional thinking is central to her strategy.
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Yet, in one area, Wood now finds herself moving with the crowd rather than against it – AI. The technology’s game-changing potential has made it the hottest trend on Wall Street, and Wood has been just as vocal as anyone in underscoring its importance.
“AI has been the big story for the past two years and it’s still the big story,” Wood has said. “In fact, it is the biggest catalyst to all of the innovation taking place out there. It is the reason that the world seems to be speeding up.”
Wood reshuffles the ARK portfolio on a regular basis, and while smaller disruptive players often feature, her conviction extends to larger AI names as well. Among them are stalwarts like Palantir (NASDAQ:PLTR) and Advanced Micro Devices (NASDAQ:AMD). Lately, however, her trades suggest she has been favoring one of these stocks while dialing back exposure to the other.
So, let’s take a closer look at which AI play Wood has been leaning more heavily into, which one has fallen out of favor, and how the Street currently views both.
Palantir
Some companies have used AI as a springboard for huge share gains, and no name on Wall Street has been better at doing that than Palantir.
The data analytics company started out working with government agencies, particularly in defense and intelligence, helping to make sense of vast and complex data sets. Its platforms are designed to integrate information from many different sources, then apply advanced modeling and visualization tools so decision-makers can spot patterns and act on insights. Over time, Palantir has expanded beyond government contracts and now works with corporations across industries like healthcare, energy, and finance, offering tools that help them manage operations, mitigate risks, and unlock efficiency.
That foundation laid the groundwork for Palantir’s breakout moment in April 2023, when it introduced its AIP (artificial intelligence platform). AIP allows organizations to safely and securely integrate large language models into their operations, bringing AI-driven decision-making to real-world problems.
Since then, the stock has gone stratospheric, surging by more than 1,900%. Importantly, the gains have not come on hype alone – they’ve been reinforced by strong business momentum.
The most recent quarterly report was another example, showing both rapid growth and earnings outperformance. Revenue rose by 47.5% vs. the year-ago period to $1 billion, in turn beating the Street’s forecast by $60.53 million. At the other end of the spectrum, adj. EPS of $0.16 outpaced analyst expectations by $0.02. And looking ahead, for the full year, the company raised its revenue guide to between $4.142 – $4.150 billion, comfortably above consensus at $3.90 billion.
Yet, for all the impressive execution, skeptics remain focused on one sticking point – valuation. Maybe that has been on Cathie Wood’s mind too; during Q2, Ark Invest offloaded 2,208,913 shares, trimming its PLTR holdings by 36%.
Wall Street analysts are echoing that caution. Goldman Sachs’ Gabriela Borges acknowledges Palantir’s growing role in the enterprise AI ecosystem but argues the stock price already reflects far more than its fundamentals can justify.
“Palantir’s commentary and results increasingly demonstrate that the enterprise ecosystem is engaging with Palantir with meaningful share of wallet as a proven way of executing AI strategy,” Borges said, before adding: “Consistent with many of our investor conversations, we struggle to reconcile a) the fundamental bull case of being in the early stages of a custom AI software era; with b) our concern that we are at peak bespoke build (as other parts of the AI ecosystem like SaaS incumbents, AI natives and system integrators will likely mature); and c) a valuation approach that takes into account upside at 80x EV/Sales (vs. 20%+ growth peers at 8x on 2026) and >150x EV/FCF (vs. peers at 40x on 2026).”
Quantifying her view, Borges rates PLTR shares as Neutral with a $141 price target, implying a 12% downside from current levels. (To watch Borges’s track record, click here)
The broader analyst community is also hesitant, assigning Palantir a Hold consensus based on 13 Holds, 5 Buys, and 2 Sells. With the average price target at $156.78, expectations are for shares to stay range-bound for the foreseeable future (See PLTR stock forecast)
AMD
If Palantir represents a company making the most of the AI opportunity, then until recently, semi giant AMD had been looked at as a name that had botched its chance of making headway in the space. Having focused its energies elsewhere, the company was late to the AI chip game, and the general Street view was that the firm lacked the GPU nous and complete ecosystem required to challenge segment leader Nvidia. Yet, those familiar with AMD’s history know better than to count the company out too soon.
After all, it was just over a decade ago that Lisa Su took hold of the reins at AMD and put into action an astounding turnaround. From teetering on the brink of bankruptcy, the chipmaker reinvented itself as a serious force in the CPU market, steadily chipping away at Intel’s dominance. That track record of resilience has investors wondering whether history might repeat in the GPU arena. And now, with the MI355 considered a strong offering and deliveries beginning at the end of June, AMD finally looks prepared to mount a credible challenge to Nvidia.
This renewed push is showing up in the numbers, too. AMD has consistently dialed in strong earnings, and Q2 was no exception. Revenue reached $7.69 billion, up 31.7% year-over-year and $260 million ahead of consensus, while adj. EPS of $0.48 landed right in line. Looking ahead, management guided for Q3 revenue of about $8.7 billion, versus the Street’s $8.32 billion expectation. That outlook excluded any potential contributions from Instinct MI308 shipments to China, due to export restrictions at the time – restrictions that have since been reversed, suggesting further upside potential.
That growing momentum hasn’t gone unnoticed by Cathie Wood, who has bet heavily on AMD’s trajectory. During Q2, she lifted Ark Invest’s stake by 91%, scooping up more than 1.28 million shares now valued at over $214 million.
Analysts are also beginning to shift their stance. Truist’s William Stein, ranked 3rd among thousands of Street pros, now believes AMD could be on the verge of making a real dent in the AI chip market.
“We had previously believed its long-term share would be approximately zero,” Stein admitted. “Based on feedback from industry contacts (component buyers/sellers), we are establishing a 10% share view. AMD’s ability to prove itself – the ‘Rome’ of AMD’s DC GPU product roadmap, is MI355. AMD started delivering this product in late June, and is the biggest contributor to the company’s expanding revenue outlook in Q3. We will continue to monitor feedback from contacts and from hyperscalers, but our new expectation is for AMD to establish 10% share over time.”
Reflecting this new confidence, Stein recently upgraded AMD from Hold to Buy while boosting his price target from $173 to $213, suggesting 28% upside from current levels. (To watch Stein’s track record, click here)
Elsewhere on the Street, AMD stock receives an additional 25 Buys and 10 Holds, all culminating in a Moderate Buy consensus rating. Going by the $184.91 average price target, a year from now, shares will be changing hands for an 11% premium. (See AMD stock forecast)
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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.