Cathie Wood buys $18.7 million of troubled megacap tech stock

Cathie Wood doesn’t easily walk away from the companies she believes in.

The Ark Invest founder has a habit of sticking with tech stocks she sees as shaping the future. Even when these names face controversy, Wood often leans in rather than pulling back.

This is what she just did, adding to a high-profile tech stock that’s been under pressure, caught in headlines and market swings.

Wood’s funds have experienced a volatile ride this year, swinging from sharp losses to strong gains.

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In January and February, the Ark funds rallied as investors bet on the Trump administration's potential deregulation that could benefit Wood’s tech bets. But the momentum hit a wall in March and April, with the funds trailing the market as top holdings slid amid growing concerns over the macroeconomy and trade policies.

Now, the fund is regaining momentum. As of July 11, the flagship Ark Innovation ETF (ARKK) is up 25.5% year-to-date, far outpacing the S&P 500’s 6.4% gain.

Wood's remarkable return of 153% in 2020 helped build her reputation and attract loyal investors. Her strategy can lead to sharp gains during bull markets but also painful losses, like in 2022, when ARKK dropped more than 60%.

As of July 11, Ark Innovation ETF, with $6.8 billion under management, has delivered a five-year annualized return of negative 1.7%. The S&P 500 has an annualized return of 16.2% over the same period.

Over the past 12 months through July 10, the Ark Innovation ETF saw nearly $2 billion in net outflows, according to ETF research firm VettaFi.

Image source: Fallon/AFP via Getty Images

Cathie Wood’s investment strategy explained

Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology, and robotics.

According to Wood, these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.

The Ark Innovation ETF wiped out $7 billion in investor wealth over the 10 years ending in 2024, according to an analysis by Morningstar’s analyst Amy Arnott. That made it the third-biggest wealth destroyer among mutual funds and ETFs in Arnott’s ranking.

Wood recently said the U.S. is coming out of a three-year “rolling recession” and heading into a productivity-led recovery that could trigger a broader bull market.

In a letter to investors published in late April, she dismissed predictions of a recession dragging into 2026 and struck an optimistic tone for tech stocks.

“During the current turbulent transition in the U.S., we think consumers and businesses are likely to accelerate the shift to technologically enabled innovation platforms including artificial intelligence, robotics, energy storage, blockchain technology, and multiomics sequencing,” she said.

But not all investors share this optimism. Over the past 12 months through July 10, the Ark Innovation ETF saw nearly $2 billion in net outflows, according to ETF research firm VettaFi.

Cathie Wood buys $18.7 million of Tesla stock

On July 11, Wood’s Ark funds bought 59,705 shares of Tesla Inc. (TSLA) . That chunk of stocks is worth roughly $18.7 million.

Wood has been a longtime supporter of Tesla and still believes in the stock, even after a sharp drop following CEO Elon Musk’s recent announcement about launching a new political party.

Tesla sales have dropped in key markets like Europe and China, as Musk faced political pushback and alienated some car buyers in key markets.

“We’ve been dealing with controversy around Elon Musk in one form or another since we first bought the stock,” Wood said in a recent interview with Bloomberg. “We do trust the board and the board’s instincts here and we stay out of politics.”

She also noted that Musk seems more focused on the business again, especially after he decided to take charge of sales in the U.S. and Europe.

“One of the announcements Elon made recently is that he is going to oversee sales in the U.S. and in Europe,” Wood said. “When he puts his mind on something, he usually gets the job done. So I think he’s much less distracted now than he was, let’s say, in the White House 24/7.”

Meanwhile, Tesla is entering the India market, with its first showroom in Mumbai next week. Tesla will need to pay about 70% import duty fees, as it does not want to produce cars in India, according to Reuters.

More Tesla:

Back in March, Wood predicted Tesla’s stock would reach $2,600 in five years, which is nearly nine times higher than where it trades now.

Much of the optimism is driven by the company’s highly anticipated Robotaxi, which Wood believes will account for 90% of the company’s value over time.

Tesla has long been Wood’s top holding, accounting for 9.26% of the Ark Innovation ETF.

The stock is down more than 22% year-to-date, the worst among the Magnificent 7 stocks.