Cathie Wood Goes Shopping: 3 Rising Stocks She Just Bought

Key Points

• Ark Invest bought shares of Alibaba, Intellia Therapeutics, and Baidu on Monday.

• Alibaba and Baidu are surging Chinese e-commerce stocks that have emerged as AI plays.

• Intellia shares have almost tripled in the last six months, as its gene-editing treatments grow closer to becoming viable.

• 10 stocks we like better than Alibaba Group ›

Cathie Wood is having a good year. The Ark Invest founder, CEO, and ace stock picker isn't back to her peak 2020 form when many of her exchange-traded funds (ETFs) more than doubled in value. However, she's definitely on track to trounce the market in 2025.

What is Wood buying? You don't have to guess. Ark Invest routinely posts its daily transactions, hours after the close of every trading day. What is she buying these days? Ark Invest added to existing positions in Alibaba (NYSE: BABA), Intellia Therapeutics (NASDAQ: NTLA), and Baidu (NASDAQ: BIDU) on Monday. Should you follow her into a high-stakes biotech and two of China's dot-com pioneers? Let's take a closer look at Wood's three fresh stock buys.

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1. Alibaba

If you figured that Chinese stocks would be in a world of hurt in 2025 as the trade war drags on, you might want to pull up some stock charts. Alibaba stock has more than doubled this year, up 112% as investors rally behind the e-commerce pioneer. Despite slowing growth -- with year-over-year quarterly revenue gains consistently in the single digits over the past year -- Alibaba has emerged as an investor darling.

Alibaba is the second largest company by market cap that has more than doubled on the U.S. exchanges. A good reason for the strong performance is that it started the year at a low valuation. Even after its 112% surge this year, you can pick up the stock for just 21 times trailing earnings.

Image source: Getty Images.

Alibaba is reasonably priced, and it's not even showing you its true earnings power. Its flagship domestic e-commerce business accounts for less than half of its consolidated revenue, but it's also 113% of its consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). This means that its bread-and-butter Tmall and Taobao segments are helping bankroll the collective losses it's experiencing with the other 55% of its business.

So if you wonder why Alibaba is rising even as its AliExpress subsidiary that sells into the U.S. market is being pinched in the trade war, you may have to consider that the tariffs situation might even be doing Alibaba's bottom line a favor. Alibaba can lose money as it builds out one of the country's largest streaming services or makes bets on cloud hosting and artificial intelligence (AI) chips. It's e-commerce business is the cash cow that keeps giving.

Wall Street is coming around. Two major analyst firms boosted their price targets this week up to $230 and $245, respectively. They were both perched in the $170s, where Alibaba is trading today. The firms with rosier outlooks point to a recent Alibaba conference where it played up the fast-growing revenue of its AI cloud business. The story is getting better, so it's understandable that the stock is following suit.

2. Intellia Therapeutics

Find yourself someone who looks at you the way that Wood looks at gene-editing stocks. Companies working on next-gen treatments through CRISPR-based therapies have been a favorite theme for Wood, and Intellia Therapeutics is one of the market's biggest gainers since the springtime swoon. The shares have nearly tripled since bottoming out in early April.

Intellia is looking at gene editing as a way to combat devastating genetic disorders. It has a few potential winners working their way through critical clinical phase trials. Despite more than tripling, it's still in a good place to keep moving higher if it scores a win. Its current market of nearly $1.9 billion gets whittled down to a market of just $1.3 billion if you go by its cash-stacked enterprise value.

Mitchell Kapoor at H.C. Wainwright boosted his price target to $30, encouraged by the nine-month enrollment for a one-time therapy that is in the third and final phase of critical trials. The refreshed price goal is nearly double where the stock is now.

3. Baidu

Another Chinese stock that is starting to rally is Baidu. The company behind China's leading search engine is only up 57% this year -- half of Alibaba's pop -- but most of that ascent has taken place in just the last five weeks. The market is also starting to see Baidu as a potential beneficiary of the trade war.

Export restrictions into China for high-end AI chips find the world's second largest economy seeking homegrown solutions. Baidu was dabbling in AI and machine learning before those terms were popular investing themes.

Even after the rally, Baidu can be had for a mere 12 times trailing earnings. Like Alibaba, the bets on spearheading the domestic AI revolution are a bonus. The original but recently sluggish online business of search and advertising will continue to pay the bills. Chinese stocks are rallying, but they're not necessarily expensive.

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Rick Munarriz has positions in Alibaba Group. The Motley Fool has positions in and recommends Baidu and Intellia Therapeutics. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.