Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought
Key Points
Cathie Wood added to her positions in Broadcom, Cerebras Systems, and Cloudflare on Wednesday.
The three stocks are trading 14% to 53% below their recent all-time highs.
Broadcom is now trading for 60 times trailing earnings, but a reasonable 18 times next year's target.
- 10 stocks we like better than Broadcom ›
Cathie Wood is making the most of the market's volatility. The founder, CEO, and chief investment officer at Ark Invest publishes her transactions daily, and she has been adding to some of her active positions lately. All three stocks have delivered double-digit percentage declines since hitting all-time highs in recent months.
Broadcom (NASDAQ: AVGO) was Ark's largest purchase for its three largest ETFs. Wood also added to her Cerebras Systems (NASDAQ: CBRS) and Cloudflare (NYSE: NET) stakes on Wednesday. Let's take a closer look at what she may find so appealing despite their recent pullbacks.
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Ark Investment Management CEO Cathie Wood. Image source: Getty Images.
1. Broadcom
Broadcom stock has cooled down since peaking in early June. The provider of semiconductor and tech infrastructure solutions has risen a mere 2.7% in 2026, less than a quarter of the market's return. That might not seem so bad, but the stock is now down 28% from the all-time high it reached less than three months ago.
Revenue is accelerating, a good look in any scenario. With its AI business becoming a bigger part of the revenue mix, the trend for top-line gains over the last few quarters is encouraging.
- Q2 2025: 20%
- Q3 2025: 22%
- Q4 2025: 28%
- Q1 2026: 30%
- Q2 2026: 48%
The big jump in its latest quarter is significant. It's Broadcom's second-largest year-over-year increase in the last nine years. You know what's even better? Its outlook at the time was calling for an 84% burst in revenue growth for its fiscal third quarter.
You won't have to wait long for that to happen. Broadcom reports next week, after Wednesday's market close. Despite the stock's pullback since last quarter's "beat and raise" performance, expectations have heightened. Analysts are calling for an 85% jump in revenue. They also see earnings per share catapulting 92% for the quarter.
Accelerating growth can lead to some impressive before-and-after snapshots. Broadcom is trading at a stiff 60 times trailing earnings, but reasonably cheap at 18 times next fiscal year's analyst target.
2. Cerebras Systems
Unlike Broadcom, which has been publicly traded for more than 28 years, Cebebras went public just three months ago. Hitting the market in May -- when the AI play was in full bloom -- has its advantages. Cerebras is ushering in a potential breakthrough in AI chip architecture: a large GPU with a continuous sheet of silicon, rather than wiring hundreds of chips together.
Cerebras went public at $185, opened at $350 on its first day on the market, and notched an intraday high of $386. It has fallen 53% since then, technically a broken IPO as of Wednesday's close. A rough first quarter as a public company back in June didn't help, but could it just have been a natural reaction following its helium-filled debut? Revenue nearly doubled, soaring 94% in its first quarter as a public company. However, thin margins and heavy customer concentration with two UAE clients accounting for almost three-quarters of its revenue were sobering.
Revenue growth slowed to 74% in the second quarter, but it's not fair to say that business is fading. Core revenue more than doubled, and its cloud business almost quadrupled. It closed out the period with $25.4 billion in remaining performance obligations, impressive for a company with less than $700 million in trailing revenue.
3. Cloudflare
Compared to Broadcom and Cerebras, Cloudflare's 14% drop from its all-time high seems tame. However, that peak took place just two weeks ago. The pullback has been swift.
Cybersecurity stocks were rocked earlier this year on AI disruption concerns, but this is one segment of enterprise software built to last. Companies need to protect the data they collect, and that means a proven track record and responsive support. Cloudflare blocks more than 300 billion cyber threats daily.
Cloudflare's 36% revenue growth in its latest quarter is the weakest among the three stocks in this list. It's still Cloudflare's strongest top-line move in three years, and it's piecing together back-to-back years of accelerating growth. Wood naturally believes that Cloudflare will move higher from here, something that can be said for all three stocks.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom and Cloudflare. The Motley Fool has a disclosure policy.
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