Cathie Wood, chief of Ark Investment Management, usually targets tech stocks with high “disruptive” potential.
She frequently adjusts her holdings around a company’s earnings, either increasing or trimming positions in response to financial results and market performances.
That’s what she did this week. She bought a tech stock both before and after its earnings.
💰💸 Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💸
Sometimes her strategy works: The flagship ARK Innovation ETF (ARKK) has returned 10.5% this year as of Feb. 7 while the Standard & Poor’s 500 Index and the Nasdaq Composite Index each have gained roughly 2.5% and 1.1%, respectively.
Opinions on Wood are divided. Supporters view her as a tech visionary, especially after she delivered an extraordinary 153% return in 2020.
Related: Veteran analyst makes surprising pivot on AMD stock after earnings shock
However, her longer-term performance has raised doubts about whether her aggressive approach is sustainable.
As of Feb. 7, 2025, the ARK Innovation ETF, with $6.3 billion under management, has delivered an annualized three-year return of negative 4.69% and a five-year return of just 2.87%.
In comparison, the Nasdaq Composite has a three-year annualized return of 12.57% and a five-year return of 16.3%.
Over the past year, ARK Innovation ETF has seen a net outflow of nearly $3 billion, according to ETF research firm VettaFi.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is straightforward: Her ARK ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology, and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in ARK funds’ values.
Amy Arnott, portfolio strategist at Morningstar Research Services, calculated that ARK Innovation ETF wiped $7.1 billion of shareholder wealth from its launch in 2014 through 2023.
That put the ETF third on the list of the biggest wealth-destroying mutual funds and ETFs for the decade ending in 2023. The analyst hasn’t updated the list for 2024.
But things might get different as Donald Trump returns office.
Related: Cathie Wood’s net worth: The Ark Invest CEO’s wealth & income
Todd Sohn, ETF and technical strategist at Strategas Securities, noted that since Trump’s 2024 re-election, the ARK Innovation ETF and the ARK Next Generation Internet ETF (ARKW) have seen significant gains.
Since Nov. 5, the two ETFs have returned 30% and 35%, respectively.
“We still strongly believe that ARKW is about as good a proxy for Trump 2.0 as one might find, with heavy exposure to Bitcoin, Crypto derivatives, Tesla, and Defense,” Cohn told MarketWatch.
Wood recently shared optimism about a shift to looser regulation under Trump’s presidency.
“What the new administration is doing is changing fear with optimism,” Wood told Bloomberg on Jan. 22. It’s “highly underestimated how important deregulation is going to be to unleashing animal spirits. We are pretty excited about this.”
Not all investors echo Wood’s confidence. Over the past year, ARK Innovation ETF has seen a net outflow of nearly $3 billion, with $24 million exiting the fund in the past month, according to ETF research firm VettaFi.
Cathie Wood buys $9 million of Qualcomm stock after earnings
On Feb. 6, Wood’s ARK Innovation ETF bought 121,696 shares of Qualcomm Inc (QCOM) .
That chunk of stocks was valued at $9.13 million as of Feb.7.
Related: Cathie Wood sells $19 million of surging tech stocks before earnings
That followed her earlier purchase of Qualcomm shares ahead of the company’s Feb. 5 earnings release.
From Jan. 27 to Jan. 30, Wood bought 29,555 shares of Qualcomm for four consecutive sessions.
Qualcomm is famously known for its Snapdragon processors and modem chips, which power millions of smartphones, from Samsung and Google to Xiaomi.
Even Apple (AAPL) , which is developing its own modem chips to replace Qualcomm components, still relies on Qualcomm’s technology for the iPhone.
But Qualcomm’s real cash cow has been its patents.
It owns key patents for mobile communication, like 5G, meaning companies like Apple and Samsung pay Qualcomm a fee for every phone sold, even if they don’t use its chips.
For the fiscal first quarter ending Dec. 29, Qualcomm reported adjusted earnings of $3.41 per share, surpassing analyst forecast of $2.97. Revenue also beat forecasts, reaching $11.67 billion, compared to expectations of $10.9 billion.
Its Q2 guidance also topped expectations. The company projects adjusted EPS of $2.70–$2.90 (consensus $2.71) and revenue of $10.2–$11.0 billion (consensus $10.36 billion).
Veteran Wall Street trader Chris Versace said on TheStreet Pro that he likes Qualcomm’s chip business even more after he reviewed the company’s earnings report.
Qualcomm’s chip sales aren’t just about smartphones now. They are now used in self-driving cars, AI-powered PCs, smart home devices, and even VR headsets.
The chipmaking business (QCT) revenue increased 20% to $10.1 billion. The fastest-growing in this segment is its automotive business, which grew 61% to $961 million in sales.
“The segment benefited from record smartphone revenue, but more importantly, in our view, showed notable progress on Qualcomm’s efforts to diversify its revenue stream away from that end market,” he wrote.
More 2025 stock market forecasts
Veteran trader who correctly picked Palantir as top stock in ‘24 reveals best stock for ‘255 quantum computing stocks investors are targeting in 2025Goldman Sachs picks top sectors to own in 2025Every major Wall Street analyst’s S&P 500 forecast for 2025
TD Cowen raised its price target on Qualcomm to $195 from $180 with a buy rating after the earnings, thefly.com reported.
Qualcomm stock closed at $167.96 on Feb.7. The stock is up 9.3% year-to-date, outperforming the Nasdaq Composite and the S&P 500 indexes.
As of Feb. 7, Qualcomm is not in ARK Innovation ETF’s top 10 holdings.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
