Forbes·2025-10-22 10:30Core Viewpoint - The Ark Innovation ETF has significantly rebounded, tripling in value over the last three years, with fund manager Cathie Wood expressing confidence that the gains are sustainable despite past volatility [1][3]. Performance Summary - The Ark Innovation ETF (ARKK) has increased by 87.1% over the past year, outperforming all other ETFs and mutual funds tracked by the American Association of Individual Investors, except for single-stock funds [2]. - The fund's performance has been driven primarily by AI-related stocks, including Palantir Technologies, Advanced Micro Devices (AMD), and Tesla, which Wood describes as the "largest AI project on earth" [2][4]. Historical Context - Following a remarkable 157% return in 2020, the fund experienced a 14% loss in 2021 and a 67% crash in 2022, leaving it 42% below its February 2021 peak despite recent gains [3]. - The fund currently manages $8.3 billion in assets, down from $17 billion at the end of 2020, indicating a significant investor exodus during its downturn [3]. Investment Strategy - Wood emphasizes that companies investing in AI are among the most profitable globally, and she believes that the performance of AI stocks will continue to rise rather than level off [4]. - Ark's portfolio includes a larger stake in AMD compared to Nvidia, with AMD's value doubling this year while Nvidia's increased by 36% [4]. - Palantir has seen a 337% increase since last November, with its sales growing 39% year over year to $3.4 billion, although it is viewed skeptically by value-oriented investors due to its high market cap relative to sales [5][6]. Tesla's Role - Tesla remains a significant holding for Ark, with a price target raised to $2,600 per share by 2029, suggesting a market value of around $9 trillion, while its current share price is $443 [6]. - Wood predicts that by 2029, 86% of Tesla's earnings will come from its robotaxi business, which was recently launched in Austin, Texas [6]. Market Environment - Wood acknowledges that the investment landscape has changed, with current policies being more favorable for her strategy compared to the challenges faced in 2022, such as supply chain issues and rising interest rates [10]. - The administration's deregulation efforts and lower corporate tax burdens are seen as beneficial for innovation and investment in AI [11]. Long-term Outlook - Despite the challenges faced, Wood remains optimistic about the long-term performance of the Ark Innovation ETF, drawing parallels to the Nasdaq's recovery after the dotcom bust [12].