Cathie Wood is famous for her singular investing style. The founder and CEO of investment management firm Ark Invest is known for her forward-looking approach, often favoring disruptors and willing to take chances other, more cautious investors might shy away from.
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Focusing on high-growth, future-oriented technologies like genomics, robotics, and fintech, Wood often takes bold positions in companies she believes will transform industries, regardless of short-term market volatility.
It’s no wonder, then, that she sees AI as a driver of “massive productivity gains” across industries such as healthcare, transportation and software development, backing that view with major investments of players in the field. In fact, Wood has been quoted as saying AI is “the most transformative technology in history.”
Recently, the investing maverick has been shaking up the AI stocks that make up the Ark Invest portfolio. Both Palantir (NASDAQ:PLTR) and Advanced Micro Devices (NASDAQ:AMD) are among the prominent AI names she owns, but Wood has been leaning toward one while trimming her holdings of the other.
So, let’s find out which AI stock is getting some love from Wood. With help from the TipRanks database, we can see if Wall Street’s analyst community is backing her moves.
Palantir
Fewer names have leveraged the AI trend to their advantage as much as Palantir. The stock has been one of the biggest winners from the rise of AI, piling on the share gains over the past couple of years.
The data analytics company specializes in software that helps organizations integrate, manage, and analyze large volumes of data. Founded in 2003, it initially focused on serving government agencies, particularly in defense and intelligence, but over time, it expanded into the commercial sector, enabling companies to make data-driven decisions by creating a unified data environment across operations.
But the moment the stock began its sky-kissing ascent can be traced to the release of its AIP (Artificial Intelligence Platform) in April 2023, which marked its push into AI integration. AIP allows users to interact with large language models directly within their own secure data systems, making complex analysis more accessible and actionable.
The launch sparked both strong business growth and a sharp rise in the stock price, which has climbed by more than 1360% since the product hit the market.
Evidence of real-world growth can be seen in Palantir’s most recent quarterly results, for 1Q25: revenue jumped by 39.3% year-over-year to $883.85 million, beating analyst expectations by $21.72 million. U.S. commercial revenue led the way with a 71% increase to $255 million, while U.S. government sales rose 45% to $373 million. At the other end of the spectrum, adj. EPS met expectations, coming in at $0.13. Looking ahead, Palantir raised its full-year revenue forecast to between $3.89 and $3.9 billion – well above the prior estimate of $3.74 to $3.76 billion and higher than the Street’s forecast of $3.75 billion.
Such results have fed into the stock’s rise and while no one is in doubt that Palantir’s growth has been mightily impressive, the problem for various Street watchers is that the share gains have made the stock’s valuation untenable.
Wood, for her part, has made PLTR a core holding, but she might be following that line of thought as well. During Q1, through ARK Investment Management, she trimmed her position by 20%, offloading 1,508,264 shares.
That act appears to get the backing of Cantor analyst Thomas Blakey, who applauds Palantir’s latest quarterly readout but can’t ignore the elephant in the room. “Palantir’s strong results indicate continued strong investment from global organizations in leveraging AI to improve both business outcomes and operational efficiencies. The company is well positioned to benefit from these trends, in our view, supporting continued dynamic growth. We maintain our Neutral rating, based mainly on valuation…”
That Neutral rating is accompanied by a $110 price target that implies shares are overvalued by ~11%. (To watch Blakey’s track record, click here)
Most on the Street agree with that thesis. The stock claims a Hold consensus rating, based on a mix of 11 Holds, 4 Sells and 3 Buys. Going by the $100.13 average target, over the next 12 months the shares will shed ~19%. (See PLTR stock forecast)
AMD
If Palantir represents the winning end of the AI trade, then AMD sits at the other end of the equation.
AMD was a name that during the second half of the 2010s was synonymous with huge share price growth. Under the leadership of Lisa Su, the company made a 180-degree turn from one on the brink of bankruptcy to a chipmaking heavyweight, closing the gap on CPU segment leader Intel by launching superior products and making the most of the fallen chip giant’s missteps. But the stock has been stuck in a rut for the past few years, unable to make any use of investors’ appetite for anything AI-related.
That has turned out to be a bit of a surprise as AMD was initially seen as the one company well-positioned to give Nvidia a run for its money in the race for dominance of the AI chip space. But the company has been unable to rein in the segment’s runaway leader in the same way it hauled in Intel – and continues to do so today.
To be fair, though, while the share price action has been disappointing (down 33% over the past year), the company has still exhibited some impressive growth, nonetheless, regularly dialing in strong earnings reports, as was the case in the 1Q25 readout. Revenue reached $7.44 billion, representing a 36% YoY increase and surpassing analyst estimates by $320 million. Data Center revenue was a standout, jumping 57% to $3.7 billion compared to the same quarter last year. On the earnings front, adj. EPS hit $0.96, beating Street expectations by $0.03. And looking ahead to Q2, AMD projects revenue of around $7.4 billion, give or take $300 million, slightly ahead of the consensus estimate of $7.24 billion.
Meanwhile, Wood must be sensing an opportunity to load up on underperforming shares of an outperforming company. Through ARK Investment Management, she snapped up 215,883 AMD shares in Q1, boosting her stake by 18%. That move now carries a price tag of $24.4 million.
Bank of America analyst Vivek Arya shares that confidence, laying out a clear case for why investors should get behind this company.
“Even though we expect NVDA (80%+ share) and custom chips (10-15% share) to dominate, we believe AMD can be a credible 3-4% share of the $300-$400bn+ TAM in AI accelerator,” the 5-star analyst said. “Many customers have significant internal workloads and compute requirements for internal teams where AMD can play an important role. Its recent acquisitions across rack-scale systems and improving software position it well, with the company getting several public recognitions at Oracle, xAI and others. We expect AMD to showcase an impressive set of partners and AI pipeline across accelerators, systems, software, CPU, and networking at its upcoming June 12th AI event.”
Quantifying his stance, Arya rates the shares a Buy while his $130 price objective factors in one-year returns of 15%. (To watch Arya’s track record, click here)
Turning to the broader Street view, we find AMD stock claims a Moderate Buy consensus rating, based on a mix of 22 Buys and 10 Holds. The average price target stands at $126.55, suggesting the stock will gain 12% over the coming months. (See AMD stock forecast)
To find good ideas for AI stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.