Cathie Wood Goes Bargain Hunting: She Just Loaded Up on 2 Cheap Magnificent Seven Stocks and an AI Player That's Dropped 60% From Its Peak.

Why do investors keep a close eye on Cathie Wood's moves? Because the founder and chief of Ark Invest knows how to spot innovators and the winners of tomorrow. Wood's flagship fund, Ark Innovation ETF, has that name for a good reason, as it includes companies that focus on game-changing technologies and making the world a more efficient and high-performance place down the road.

But Wood won't pay ridiculous prices for these players, and instead, looks for opportunities to scoop them up for a bargain -- or at least at reasonable levels considering their long-term prospects. In recent days, Wood went bargain hunting, loading up on two cheap Magnificent Seven stocks and an artificial intelligence (AI) player that's dropped 60% from its peak earlier this year. Let's check out these buys, each completed on Nov. 25.

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1. Meta Platforms

Wood bought 23,769 shares of Meta Platforms (NASDAQ: META), making it the 25th largest holding out of a total of 48 in the Ark Innovation ETF. This social media powerhouse and top AI stock is a member of the Magnificent Seven tech stocks that have driven overall stock market gains in recent years. And right now, Meta is the cheapest of the lot, trading for 25x forward earnings estimates.

You're probably most familiar with this company due to its social media apps, from Facebook to Instagram, and thanks to advertising across these platforms, the company generates billions of dollars in earnings annually. But Meta's next big growth opportunity may lie in AI, and the company is aggressively investing to meet its AI goals.

Meta has built its own large language model to power its AI platforms, such as its popular virtual assistant, known simply as Meta AI. The company aims to keep users on its platforms longer and revolutionize the advertising experience -- all of this is meant to boost growth over the long term. Wood's recent purchase of the stock suggests she sees this potential.

2. Alphabet

Wood purchased 113,276 shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and this stock now is the 42nd biggest holding in the Innovation ETF. Alphabet, like Meta, is a reasonably priced Magnificent Seven stock, trading for 30x forward earnings estimates.

Also like Meta, Alphabet has built an empire in a business outside of the AI space, and this business generates billions of dollars in annual revenue. I'm talking about internet search. Alphabet owns Google Search, the world's most popular search engine, and advertising across the Google platform drives growth investors can count on quarter after quarter.

Alphabet also is well-positioned to become an AI giant thanks to its Google Cloud business. It's one of the world's biggest cloud service providers, and customers are rushing here for access to AI chips and systems. Alphabet, seeing current growth and potential for ongoing momentum, is building out infrastructure so that it can continue to play a major role as the AI story develops. Though Alphabet is a smaller holding for Wood, her recent purchase of the shares shows she's confident about the company's potential in the next phases of AI growth.

3. CoreWeave

Wood bought 358,999 shares of CoreWeave (NASDAQ: CRWV) on Nov. 25, then added about 10,000 more the next day. The stock now is the 31st largest holding in the Innovation fund. It's not surprising to see Wood, who loves up-and-coming growth players, building up a position in CoreWeave.

This company launched its initial public offering in late March of this year, then progressively soared more than 300% -- but since its peak in June, the stock has dropped about 60%. So now could represent a great entry point for investors, such as Wood, who are looking for an AI bargain.

CoreWeave operates in a newish area called "GPU-as-a-service" or "GPUaaS." This is the business of renting out access to graphics processing units (GPUs), which are high-performance AI chips. Major cloud service providers also offer customers access to this compute, but CoreWeave focuses specifically on AI workloads, which means it has a certain expertise in this area.

This young company isn't yet profitable, and it comes with some risk considering competition in the cloud space and the investment required to build out capacity. But so far, demand has resulted in explosive revenue growth, making CoreWeave a great bargain buy today for Wood and other growth investors.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.