Cathie Wood Just Cut Her Position in an AI Stock That's Climbed 1,000% and Piled Into Shares of 2 Other AI Giants

Cathie Wood is known for two things: making daring investment moves that go against the crowd and doing this with a focus on the long term. This means Wood might sell a spectacularly popular stock that's soaring and buy shares of a stock that's dropped in recent times. The chief executive officer of ARK Invest does this to get in on innovators -- her favorite type of company -- at a reasonable price. She doesn't mind if the stock struggles in the near term because she aims to stick with the companies in her portfolio throughout their growth stories.

Just this week, Wood has done exactly this, and the move concerns three artificial intelligence (AI) stocks. AI stocks are right up Wood's alley as the technology promises to revolutionize the way the world works -- and that could represent billions of dollars in revenue for companies that lead the way. This week, Wood cut her holding of one of her favorite stocks -- one that's soared 1,000% over three years -- and added to her positions in two other AI giants. Let's take a closer look at her moves.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Selling shares of a favorite

So, let's start with the stock Wood sold. This week, during more than one trading session, Wood sold shares of Palantir Technologies (NASDAQ: PLTR), a maker of AI-driven software systems. This stock, as of May 9, was the sixth-biggest holding, with a 6% weighting, in her flagship Ark Innovation exchange-traded fund (ETF).

Palantir reported fantastic revenue growth earlier in the week, with a solid balance of growth and profitability, and the company highlighted the strength of demand moving forward. So there wasn't any bad news in the report, but, as a big holder of Palantir, Wood may have decided to lock in some profits to reallocate into other opportunities. On top of this, Palantir shares are pricey today at about 200 times forward earnings estimates, and this could weigh on near-term stock performance.

Still, it's clear that with Palantir's significant position in Ark Innovation, Wood still is optimistic about the company's long-term prospects from earnings and share performance perspectives even after the stock has climbed in the quadruple digits over the past three years.

Two AI chip leaders

Now, let's consider Wood's buys. The top investor added more shares of AI chip designers Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) to Ark Innovation this past week. It's no surprise the bargain-hunting Wood made this move considering the valuations of these players right now. Nvidia trades for 26 times forward earnings estimates, down from 50 times earlier this year. AMD's valuation decline has been less spectacular, but the stock still looks like a good value today for 25 times forward earnings estimates compared to more than 30 times a few months ago.

Nvidia dominates the AI chip market, and its fast pace of innovation should keep it in the lead. So anyone, such as Wood, who believes in the AI growth story might view Nvidia as a solid buy at the moment. The company has proven itself by generating record revenue in recent quarters and high profitability on sales, and Nvidia has set out an aggressive product-development roadmap.

Meanwhile, AMD also is making progress in the AI chip market, and there's enough room in this industry for this player to be successful without unseating Nvidia. AMD Chief Executive Officer Lisa Su said in the recent earnings report that the company delivered "an outstanding start to 2025." Revenue and gross profit both climbed in the double digits, and AMD announced a gross margin of 50%, indicating strong profitability on sales. AMD's strengths in central processing units(CPUs) -- the main processor in standard computers -- as well as its strengths in AI for data center customers have driven this growth.

So, what do these latest moves by superstar investor Cathie Wood mean for you as an investor? All three of these AI giants are great stocks to own for the long term. But of the three, from a valuation perspective, Nvidia and AMD represent the best buying opportunities right now. Considering the pace of AI growth, they may not remain at these valuations for long, so Wood took the opportunity to add to her holdings -- and other AI savvy investors may want to do the same.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 5, 2025

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.