- Innovation ETF founder looking at next leg of AI boom
- Chip designer Nvidia has been a massive recent winner in AI
- Wood says software to earn $8 for every $1 of Nvidia tech sales
Software stocks will be next to enjoy a bumper jump in AI (artificial intelligence) demand, according to ARK Investment Management chief executive and founder Cathie Wood, and she already has her eye on three potential winners.
After the rough $200 billion AI spike in chip designer Nvidia (NVDA:NASDAQ)’s market valuation recently, Wood told Bloomberg TV that her flagship ARK Innovation ETF is on the look-out for software firms that ‘are actually right now where Nvidia was when we first bought it.’
ARKK moved to cut its stake in California-based Nvidia in January, meaning the fund has not been a beneficiary of a rally in the stock that has seen the company's valuation temporarily top $1 trillion. In a tweet earlier this week, Wood defended the decision, arguing that Nvidia shares are ‘priced ahead of the curve.’
For now, Wood said she will turn her attention to AI-related software players, including New York-based UiPath (PATH:NYSE), San Francisco-based Twilio (TWLO:NYSE), and telehealth group Teladoc (TDOC:NYSE).
Each of these firms have seen their share prices fall sharply in recent months, but Wood believes they could be major beneficiaries as software starts to stake its claim to the perceived pot of gold that AI technology will help create.
WHY SOFTWARE AI EXCITES WOOD
‘For every dollar of hardware that Nvidia sells, software providers will generate $8 in revenue,’ Wood noted in the Bloomberg interview.
UiPath is a global robotic process automation (RPA) software provider that counts Amazon, EY and Bank of America as customers. Its software effectively automates time-intensive and laborious tasks, freeing human staff to focus on more valued-added work.
Twilio is a Unified Communications-as-a-Service (UCaaS) firm, providing 21st Century cloud-based and integrated systems with access to the latest tools and apps.
Virtual healthcare company Teladoc provides clients with easy access to medical professionals to consult on primary care, mental health, chronic care and everything in between, using calls, videoconferencing software and mobile apps to provide on-demand remote medical care.
