3 Reasons Cathie Wood's Buying Nvidia Stock This Week

One of the most widely followed aggressive growth fund managers kicked off this week with a hankering for Nvidia (NASDAQ: NVDA). Cathie Wood -- founder and CEO at Ark Invest -- only added to two existing positions across her high-octane ETFs on Monday. Nvidia was one of those two purchases.

It wasn't just a nibble. Ark Invest purchased shares of the world's most valuable company in all five of its largest ETFs. This is the first time in almost two weeks that Wood has increased her stake in Nvidia. Let's take a closer look at some of the potential reasons for Monday's move.

Image source: Getty Images.

1. There's a new market opportunity

Shares of Nvidia moved 6% higher on Monday. Wood often adds to some of her largest investments when the shares are temporarily out of favor, but that obviously wasn't the case here. The catalyst for Nvidia's rally was the announcement of a push into the central processing unit (CPU) market for Microsoft PCs and laptops.

Its new Vera CPU is a high-performance processor, built for the new era of agentic AI that Nvidia itself is championing. The new CPU is reportedly 1.8 times faster and more efficient than legacy x86 processors. This is a highly competitive market, and margins aren't likely to match those of its flagship businesses. It still offers a new potential market for Nvidia, and the incremental business merits the incremental upside.

2. Momentum remains strong

Even before this new market opportunity, Nvidia was rolling. Revenue soared 85% in its latest fiscal quarter, accelerating for the third consecutive report. This is a high-margin, scalable business. Its adjusted profit more than doubled, with a spectacular net margin of 55.7%.

The pace of its business is picking up despite trade restrictions with China, tariff hurdles, and supply constraints. In short, this isn't even Nvidia growing at full strength. It's the most valuable company by market cap for a reason.

3. It's trading at a discount to its growth

Nvidia stock is surprisingly cheap. The shares are almost a six-bagger over the past three years, but up just 20% so far in 2026. It's trailing the blazing year-to-date returns posted by data storage and other growth hardware stocks riding the AI boom that Nvidia is leading.

Nvidia's recent lull and surging profitability have led to some pretty surprising results. Nvidia is now trading for just 18 times next fiscal year's analyst profit target. Even with top- and bottom-line growth expected to slow to half of its current pace in fiscal 2028, it's still a deep discount to its earnings multiple. No one will confuse Wood for a value investor, but Nvidia should be interesting to more than just growth investors these days.

Rick Munarriz has positions in Nvidia. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool has a disclosure policy.