Cathie Wood buys $45 million of battered megacap tech stock

Cathie Wood doesn’t give up on companies she believes in.

The Ark Invest chief is known for sticking with tech stocks she sees as “disruptive”, often buying even when they face setbacks.

This is what she just did, adding to a high-profile tech stock amid a post-earnings dip.

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

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 that momentum hit hard 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 25, the flagship Ark Innovation ETF (ARKK) is up 33.3% year-to-date, far outpacing the S&P 500’s 8.6% 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 tumbled more than 60%.

As of July 25, Ark Innovation ETF, with $6.8 billion under management, has delivered a five-year annualized return of negative 0.03%. The S&P 500 has an annualized return of 16.46% over the same period.

Cathie Wood has struck an optimistic tone for tech stocks.

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

Cathie Wood buys $45 million of Tesla stock after earnings

On July 24, the day when Tesla (TSLA) dropped 8.2% following its second-quarter earnings, Wood’s Ark funds snapped up 143,190 shares worth around $45.3 million. This was one of Wood’s largest recent purchases.

Tesla’s Q2 earnings were quite dismal. The electric vehicle maker reported a 16% drop in automotive revenue as vehicle sales declined for the second straight quarter.

The company posted adjusted earnings of 40 cents per share, missing the 43 cents expected. Revenue came in at $22.50 billion, slightly below the $22.74 billion forecast.

“We probably could have a few rough quarters. I am not saying that we will, but we could,” CEO Elon Musk said.

Tesla is grappling with growing challenges, from the rise of lower-cost electric vehicle competitors, especially in China, to a political backlash against Musk that has damaged the brand in the U.S. and Europe. But that hasn’t stopped Wood, a longtime supporter of Tesla, from doubling down.

“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 US and Europe.

“One of the announcements Elon made recently is that he is going to oversee sales in the US 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.”

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.

Musk said during the earnings call that Tesla’s robotaxi service, which the company has recently started testing in Austin, Texas, will expand to other states, with a goal of covering half the U.S. population by year-end pending regulatory approvals.

“That's at least our goal, subject to regulatory approvals. I think we will technically be able to do it,” he said.

Tesla stock is down more than 21% year-to-date. The stock has long been Wood’s biggest holding, accounting for 9.6% of the Ark Innovation ETF.