Cathie Wood's Ark Innovation ETF Surges on AI Bets, Led by Tesla and Roblox
Cathie Wood's Ark Innovation ETF (NYSEMKT: ARKK) has been one of the best performing ETFs in the market recently. In less than three months since the April lows, the ETF has gained more than 75%.
Of course, the entire stock market has rebounded during that period. In fact, the S&P 500 hit a fresh all-time high on the day this was written. But the Ark Innovation ETF has outperformed all of the major stock indices recently. Let's look at what is driving the performance, and whether this AI-focused ETF could be a smart buy right now.
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Here's why Ark Innovation ETF has soared recently
In a nutshell, the Ark Innovation ETF invests in a portfolio of mostly AI-focused stocks that have mostly performed quite well lately. Earlier in 2025, there was widespread fear that AI investment would slow down, that tariffs would hurt any AI stocks with international business, and that the U.S. economy was potentially heading for a recession.
Now, there is far less uncertainty and a generally brighter economic outlook. And it is certainly reflected in the performance of the Ark Innovation ETF's top holdings:
|
Company (Symbol) |
% of Ark Innovation ETF Assets |
1-Year Gain |
|---|---|---|
|
Tesla (NASDAQ: TSLA) |
13% |
66% |
|
Coinbase (NASDAQ: COIN) |
8.7% |
63% |
|
Roblox (NYSE: RBLX) |
8.3% |
185% |
|
Roku (NASDAQ: ROKU) |
7.8% |
52% |
|
Palantir (NASDAQ: PLTR) |
5.5% |
471% |
|
Tempus AI (NASDAQ: TEM) |
5.2% |
147% |
|
Robinhood Markets (NASDAQ: HOOD) |
5.1% |
272% |
|
Shopify (NASDAQ: SHOP) |
5% |
75% |
Data sources: Ark Invest, YCharts. Performance as of 6/27/2025.
To call this an impressive level of performance would be an understatement. The worst performing stock out of Ark Innovation ETF's eight largest holdings is up by 52% over the past year. Four out of the eight have produced triple-digit returns in just a year. Shares of the ETF are up by 60% over the past year, and the performance of its top holdings has certainly been the driving force.
Is the Ark Innovation ETF still a buy?
To be sure, the Ark Innovation ETF's performance has been spectacular. But that doesn't necessarily mean shares of the ETF are expensive, if the gains are well deserved.
Just to name a few things, Coinbase is benefiting from renewed interest in cryptocurrencies and a generally regulatory-friendly environment. Palantir's AI innovations have made it one of the biggest success stories in the artificial-intelligence revolution. And Shopify has generally done an excellent job of executing on its growth strategy. It's also been a big winner of lower tariff uncertainty.
The bottom line is that the Ark Innovation ETF isn't a cheap investment by any definition. Most of the stocks in the portfolio trade for rather high price-to-earnings and price-to-sales ratios. But it isn't necessarily an expensive one, and the revenue growth of most of its top holdings justifies the performance and premium valuations we're seeing. If you're looking to add AI exposure to your portfolio but don't want to pick individual stocks yourself, the Ark Innovation ETF remains a solid option.
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Matt Frankel has positions in Roblox and Shopify and has the following options: short January 2026 $135 calls on Shopify. The Motley Fool has positions in and recommends Palantir Technologies, Roblox, Roku, Shopify, and Tesla. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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