Cathie Wood buys $22.3 million of surging semiconductor stock

Cathie Wood, head of Ark Investment Management, often makes moves in her favorite tech stocks around earnings season.

This time, she’s buying Nvidia (NVDA), adding $22.3 million worth of shares just days before the chipmaker’s quarterly earnings report.

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Last year, the flagship Ark Innovation ETF gained 35.49%, far outpacing the S&P 500’s return of 17.88% in the same period. But so far this year, Wood’s flagship Ark Innovation ETF (ARKK) is up 1.64% as of August 19, while the S&P 500 surged 12.36%, Yahoo Finance data shows.

Wood gained a reputation after the Ark Innovation ETF delivered a 153% return in 2020. But her style also brings painful losses in bearish markets, as seen in 2022, when the Ark Innovation ETF tumbled more than 60%.

Those swings have weighed on Wood’s long-term gains. As of August 18, her Ark Innovation ETF has delivered a five-year annualized return of -7.18%, while the S&P 500 has an annualized return of 11.82% over the same period, according to data from Morningstar.

Over the past 12 months through August 13, the Ark Innovation ETF saw roughly $2.8 billion in net outflows.

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Cathie Wood says AI could help sustain high corporate profits

Wood usually focuses on high-tech companies across artificial intelligence, blockchain, biomedical technology, and robotics. She believes these businesses have strong growth potential, though their volatility often causes fluctuations in the Ark’s funds.

Over the decade ended 2025, the Ark Innovation ETF wiped out nearly $5 billion in investor wealth, according to an analysis by Morningstar’s analyst Amy Arnott. That made it the fourth-biggest wealth destroyer among mutual funds and ETFs in the ranking.

Wood remains optimistic about AI, which she sees as a major driver of productivity, economic growth, and corporate profits in the years ahead.

In a recent post on X, Wood said U.S. corporate profits remain unusually strong, with domestic profits before tax at 13.2% of GDP, a level she said is near multi-decade highs.

Related: Cathie Wood sells $11.6 million of surging tech stock

Some of that strength came from the massive monetary and fiscal stimulus during the pandemic, but Wood believes another factor is helping sustain margins today: companies are leaning into AI and productivity gains to protect them.

“I think we’re still early in seeing how far that can go,” she said, adding that companies that use AI effectively will “separate themselves from the ones that don’t.”

Wood also found reasons for optimism in the latest U.S. jobs report, despite nonfarm payrolls falling by 23,000.

“It’s not as scary as it looks,” she said, pointing to higher prime age labor force participation, cooling wages and productivity growth approaching 3%. She also suggested AI may be helping accelerate baby boomer retirements.

Not all investors agree with Wood’s optimism. Over the past 12 months through August 13, the Ark Innovation ETF saw roughly $2.8 billion in net outflows, according to data from ETF research firm VettaFi.

Cathie Wood buys $22.3 million of Nvidia stock

On August 17, Wood’s Ark funds bought a total of 101,356 shares of Nvidia (NVDA), according to Ark’s daily trading information. Based on the latest closing price of $219.74, these stocks were worth about $22.3 million.

Shares of Nvidia have gained more than 9% so far in August. Year to date, the stock is up 17.8%, outperforming the S&P 500 but trailing chipmaking peer AMD, which has surged 126.2%, and the Philadelphia Semiconductor Index, which has rallied 67.3% over the same period.

The weakness reflects investors’ growing concerns about whether Nvidia can sustain its rapid growth. Some hyperscale cloud providers are developing their own custom AI chips, while Wall Street questions whether hundreds of billions of dollars in AI infrastructure spending will ultimately generate returns.

Wood’s move came ahead of Nvidia’s fiscal second-quarter earnings report, which is scheduled for August 26.

Related: Cathie Wood buys $16.2 million of popular semiconductor stock

Three months ago, Nvidia reported results that continued to support its growth thesis.

For the fiscal first quarter ended April 26, Nvidia reported non-GAAP earnings of $1.87 per share, beating Wall Street’s estimates of $1.76. Revenue came at $81.6 billion, up 85% from a year earlier. It also reported record Data Center revenue of $75.2 billion, up 92% year over year.

“The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed,” said Nvidia CEO Jensen Huang in a statement. “Nvidia is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced.”

Nvidia investors are watching Big Tech’s AI spending because Microsoft, Meta and Alphabet are among its biggest buyers. Their latest capex plans, however, are challenging expectations for another broad surge in spending.

Also read: Bank of America doubles down on Nvidia stock despite big risk

In their Q2 earnings, Microsoft kept its fiscal 2026 outlook unchanged, Meta raised only the low end of its forecast, while Alphabet increased its guidance to $195 billion-$205 billion from $180 billion-$190 billion, but later saw its stock fall.

Nvidia’s first-quarter fiscal 2027 results also highlighted some underlying risks. Of its $58 billion in net income, $13.4 billion came from unrealized equity gains rather than operations, according to a report.

The chip maker also remains heavily dependent on a small group of big customers, with three hyperscalers accounting for 54% of revenue.

Still, many analysts remain bullish on Nvidia stock. Bank of America analyst Vivek Arya said in a recent research note that he sees a “compelling” valuation for Nvidia at current share levels.

The analyst said Nvidia shares are trading at a 34%-50% free cash flow discount, even when accounting for financing risks.

Arya also cautioned that Nvidia could face pressure if AI demand slows. He expects the company to provide more details when it reports earnings later this month.

“If AI demand slows, both NVDA’s growth rate and balance sheet could come under pressure. The debate is how to reflect this reward-versus-risk in Nvidia’s valuation,” the analyst said.

Nvidia is currently not in the top 10 holdings in the Ark Innovation ETF.