Cathie Wood sells $28 million of popular AI stock

Cathie Wood, chief of Ark Investment Management, frequently adjusts her top positions, adding to a holding when the stock falls and selling when it rises.

In the past week, she has sold shares of a popular tech stock that’s been climbing this year.

Wood’s funds have experienced a volatile ride lately, 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 the momentum faded in March and April, with the funds trailing the market as top holdings — especially Tesla, her biggest position — slid amid growing concerns over the macroeconomy and trade policies.

Now, the Ark funds are making a strong comeback. As of Aug. 8, the flagship Ark Innovation ETF (ARKK) is up 29.7% 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 dropped more than 60%.

As of July 30, Ark Innovation ETF, with $6.8 billion under management, has delivered a five-year annualized return of negative 1.46%. The S&P 500 has an annualized return of 15.5% over the same period.

Over the past 12 months through Aug. 7, the Ark Innovation ETF saw $1.8 billion in net outflows, with nearly $885 million exiting the fund in just the past five days, 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.

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

Over the 10 years ending in 2024, the Ark Innovation ETF wiped out $7 billion in investor wealth, 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.

Still, Wood has been bullish on the 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.

Not all investors echo her optimism. Over the past 12 months through Aug. 7, the Ark Innovation ETF saw $1.8 billion in net outflows, with nearly $885 million exiting the fund in just the past five days, according to ETF research firm VettaFi.

Cathie Wood sells $28 million of Palantir stock

Wood has been cashing in on Palantir (PLTR) recently, with Ark funds selling 153,338 shares worth about $28.01 million over three consecutive days from Aug. 6 to Aug. 8.

Wood’s selling came as Palantir hit a record high of $186.96 on Aug. 8, just days after reporting its strongest-ever second-quarter earnings on Aug. 4. The stock is now up 147.2% year to date, setting multiple records along the way.

Palantir provides AI-driven data analytics software to the U.S. government, military, and commercial clients. The stock soared 340% in 2024 as demand for AI infrastructure surged across sectors.

Palantir’s second-quarter revenue jumped 48% year over year to $1 billion, hitting a milestone analysts hadn’t expected until later this year. Adjusted earnings of 16 cents per share topped Wall Street’s 14-cent forecast.

The company also raised its full-year guidance to between $4.142 billion and $4.150 billion, up from an earlier range of $3.89 billion to $3.90 billion.

Palantir’s U.S. revenues jumped 68% from a year ago to $733 million for the quarter, largely driven by the U.S. commercial segment, which nearly doubled to $306 million.

Its U.S. government revenues rose 53% year-over-year to $426 million, despite massive spending cuts under President Donald Trump and his Department of Government Efficiency, which was formerly led by Elon Musk.

Palantir has recently secured a 10-year contract with the U.S. Army worth up to $10 billion. The number is more than three times Palantir's 2024 revenue of $2.87 billion, making it one of its biggest ever. It could also significantly boost Palantir's Remaining Performance Obligations (RPO).

Wood said in February that she’s moving away from hardware and infrastructure and doubling down on software, with Palantir being one of her top picks.

“Palantir is a very expensive stock, but there’s nothing like it in the software space,” Wood said in an interview with CNBC. “It is, we believe, going to dominate the biggest part of the tech stack when it comes to AI. And that’s the platform as a service part of the stack.”

Her selling likely reflects a strategy of taking profits while the stock trades at lofty valuations, rather than walking away from it. Wood has often trimmed positions after big rallies to free up capital for other opportunities, while still holding on to her key positions.

Palantir is still one of Wood’s top bets after recent sales. The stock is now the seventh biggest holding of the ARK Innovation ETF, accounting for 5.04%.