Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought
Key Points
Cathie Wood's Ark Invest bought shares of Alphabet, Meta Platforms, and Alibaba Group on Wednesday.
Alphabet stock has more than doubled over the past year, as its emerging as a AI play on the hardware and software ends of the market.
Ark Invest also bought Alibaba, while selling Baidu. She apparently sees good and bad opportunities in China.
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Cathie Wood bought only three stocks on Wednesday. The co-founder, CEO, and chief investment officer at Ark Invest added to existing positions in Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Alibaba Group (NYSE: BABA).
Why did she buy into a pair of "Magnificent Seven" stocks and the leading Chinese e-commerce company? That's a good question. Let's size up where all three companies are now, and maybe that can shed some light on why the widely followed growth investor chose these three stocks to load up on at the midpoint of this week.
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1. Alphabet
Don't fall for the myth that large stocks can't deliver monster returns. Alphabet stock is one of just three stocks with a market cap above $4 trillion, but it has soared 116% over the past year. Google's parent company is experiencing a renaissance for growth investors.
Revenue growth is accelerating for the third consecutive year. The bar was admittedly low when the Magnificent Seven stock saw its top line rise less than 9% in 2023. Revenue rose 14% and 15% in subsequent years, with net margin reaching an impressive all-time high of 33% in 2025.
Revenue rose 22% in the first quarter of this year. Profitability is growing even faster, so it's already on pace to set new margin records. Alphabet's high-margin online advertising business continues to drive more than two-thirds of its revenue, but its smaller Google Cloud hosting platform just delivered 63% year-over-year growth.
Another catalyst for Alphabet's more than doubling over the past year is its emergence in AI, beyond what it means for the healthy demand for Google Cloud. Google Gemini continues to trail market leader ChatGPT, but it's growing quickly. Alphabet also is no longer content to simply sit on the sidelines when it comes to hardware. Google is now starting to market the Tensor Processing Units that it's been using to efficiently operate its data centers.
Despite committing a whopping $185 billion in capital expenditures in pursuit of its ascending opportunity in AI, analysts still see material bottom-line growth for Alphabet. They see the leader in search posting 21% in revenue growth, with earnings per share rising 32% for all of 2026. Some one-time security gains boosted the first quarter's profitability, but that's still impressive.
Alphabet turned heads by announcing plans to sell $85 billion worth of stock this week. A lot of big names are buying into the Alphabet growth story. So is Wood, adding both classes of Alphabet shares to four of her five largest ETFs.
2. Meta Platforms
Alphabet isn't the only Mag 7 constituent accelerating its growth. It's working on what could be its fourth consecutive year of top-line acceleration. Facebook, Instagram, and WhatsApp keep a lot of people connected. The parent company was serving 3.56 billion daily active users at the end of the first quarter.
Meta got its start by appealing to high school and college students, but these days even its forward earnings multiple is in the teens. You can buy the social media juggernaut for 19 times this year's projected profit. Wood is giving the stock a thumbs-up. That's apparently a good thing.
3. Alibaba
China's e-commerce pioneer isn't accelerating its business the way Alphabet and Meta have been doing lately. Alibaba has posted four consecutive fiscal years of single-digit top-line growth. Making matters worse, the pace has decelerated in back-to-back years.
Alibaba's revenue slowed to 3% growth in fiscal 2026. Despite the slowdown, Alibaba stock more than doubled last year. It's a different story this year, with Alibaba's double-digit price decline. Like Alphabet, Alibaba is entering the AI chip market. With current trade restrictions between China and the U.S., the world's second most populous nation is turning to hometown heroes.
Alibaba can afford to go big in emerging markets. Its Taobao and Tmall e-commerce hubs generate the lion's share of its earnings, giving Alibaba the flexibility to chase the AI opportunity. It's worth noting that this move doesn't mean Wood sees China as a growth opportunity again. It actually sold shares of Chinese search engine leader Baidu (NASDAQ: BIDU) on Wednesday, just as it was loading up on fellow Chinese tech bellwether Alibaba. Wood is always making interesting moves.
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Rick Munarriz has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Baidu, and Meta Platforms. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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