Cathie Wood Defends ARKK's Move to Dump Nvidia

Cathie Wood defended her firm’s decision to bail on Nvidia Corp. before the chipmaker’s shares surged 160%, saying the computer-chip industry’s boom-bust cycle poses risks.

Wood’s flagship ARK Innovation ETF (ticker ARKK) cut its holding in Nvidia in January and missed out on most of the rally that added more than half a trillion dollars in market value.

Nvidia jumped 24% Thursday alone after forecasting $11 billion in sales this quarter, 53% more than analysts expected.

“As far as Nvidia goes, there are a few reasons we take some pause,” Wood said in an interview on Bloomberg TV. She said when she hears, “shortages, shortages, shortages about GPUs or anything, I begin to think about the cyclicality of a group.”

Nvidia also faces growing competition in the battle to produce chips to power the computing infrastructure behind artificial intelligence programs, Wood said, citing companies like Tesla Inc., Meta Platforms Inc., and Alphabet Inc. that are developing their own chips.

While Wood’s flagship fund dropped its holdings to Nvidia, some of the firm’s “more specialized portfolios,” including the ARK Next Generation Internet ETF (ARKW) and the ARK Fintech Innovation ETF (ARKF), still retain some exposure to the company.

“We have not gotten much pushback,” she said regarding the decision to drop Nvidia, which she describes as “a check-the-box stock.”