Every AI Stock Cathie Wood Owns, Ranked From Best to Worst

 Every AI Stock Cathie Wood Owns, Ranked From Best to Worst

Ark Invest CEO Cathie Wood looks for one thing in her investments above all others: innovation. It's no coincidence that half of Ark Invest's actively managed ETFs feature the word in their names. There's arguably no greater area for innovation right now than artificial intelligence (AI). Unsurprisingly, Ark Invest has loaded up in recent years on AI stocks.

 Here is every AI stock that Wood owns, ranked from best to worst. I've listed Alphabet in first place for three main reasons. First, the company is indisputably a leader in AI with its Google DeepMind unit. Second, AI gives Alphabet multiple paths to growth, including self-driving car technology with its Waymo business and hosting AI apps on Google Cloud. Third, the stock is arguably the most attractively valued of the top-tier AI contenders.

However, all the other members of the top five have a lot going for them. Amazon and Microsoft, like Alphabet, should benefit tremendously from AI advances. Meta's open-source approach to AI could reap significant rewards. And Tesla has a huge potential market opportunity with self-driving robotaxis.Nvidia's stock has skyrocketed this year, with AI driving seemingly insatiable demand for its graphics processing units. The key problem for Nvidia, though, is its valuation. 

With shares trading at nearly 44 times sales, my fear is that a major pullback is due for the high-flying stock.It's a similar story for Palantir and, to a lesser extent, AMD. Palantir's forward earnings multiple is close to 82x. That's steep for a company that delivered year-over-year sales growth of only 13% in its latest quarter. AMD's revenue declined 18% year over year in the second quarter, although I expect better days are ahead.

Taiwan Semi boasts an impressive moat. Its chips are used by AI leaders, including Nvidia and AMD. JD.com is investing heavily in AI apps. Its stock is also dirt cheap.But both stocks share the same asterisk: China. The potential for the Chinese government's interference with JD's business raises uncertainties. And the possibility that China could invade Taiwan increases the risks associated with investing in Taiwan Semi.I call the final four AI stocks in Wood's portfolio her up-and-comers. All of these stocks are making a name for themselves in AI but remain smaller (and riskier) than the other AI leaders in which Ark Invest has positions.

Teradyne's technology is used to test autonomous mobile robots. I listed it ahead of the other up-and-comers because it's already profitable, whereas the other three companies aren't.However, I like the potential for all of these bottom-rung AI stocks that Wood owns. Accolade is using AI to develop personalized healthcare solutions. Schrodinger and Recursion are using AI in drug discovery and development. 

Knocking on Wood

Wood would probably argue that Tesla deserves to be ranked No. 1 instead of Alphabet. The electric vehicle maker is the top position in her combined Ark Invest portfolio, making up more than 7.6% of the ETFs' total holdings. None of the other top five AI stocks in my ranking, however, have a weight of more than 0.22%. My main knock against Wood is that she hasn't invested as heavily in the best of these stocks as she could have. Overall, though, I think that she has an impressive lineup of AI stocks in her Ark Invest holdings.

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*They just revealed what they believe are the ten best stocks for investors to buy right now... and Alphabet wasn't one of them! That's right -- they think these 10 stocks are even better buys.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon.com, Meta Platforms, and Microsoft.

 The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon.com, JD.com, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.

Cathie Wood, the renowned founder and CEO of ARK Invest, has been widely recognized for her interest in innovative technologies, particularly in the field of artificial intelligence (AI). Its investment strategies have led its funds to impressive growth and attracted both institutional and retail investors. In this article, we'll dive into the AI ​​stocks held by Cathie Wood and rank them from the most promising to those that may require a bit more caution. Let's explore the future potential of these AI companies and their impact on the market

Tesla is undoubtedly one of Cathie Wood's most prominent AI stocks. With its groundbreaking advances in self-driving technology and AI-driven manufacturing processes, Tesla is at the forefront of the AI ​​revolution in the automotive industry. As the global push for sustainable energy continues, Tesla's innovative AI applications are expected to play a key role in securing its place as a top pick in Wood's portfolio.

Led by CEO Jack Dorsey, Square has expanded beyond its origins as a payment processing company. It is now a comprehensive fintech ecosystem with a strong emphasis on AI-driven solutions. Its Cash app, which allows users to invest in stocks and bitcoin, uses AI algorithms to provide personalized financial advice. Square's AI-based risk assessment and fraud detection mechanisms further strengthen its position as a promising investment.

Roku's streaming platform uses artificial intelligence to improve the user experience through content recommendations and ad targeting. As the streaming industry continues to grow, Roku's AI capabilities give it a competitive edge. Its ad-supported platform and expanding user base make it a solid contender in Wood's portfolio, positioning it favorably for future growth.

Telehealth has become a necessity during the global pandemic, and Teladoc Health has emerged as a prominent player. Its AI-driven virtual healthcare platform offers remote consultations, personalized medical advice and even mental health support. As the world embraces telemedicine, Teladoc's advanced AI solutions have the potential to revolutionize healthcare delivery.

Cloud-based communications platform Twilio has seen significant growth, largely driven by AI-driven solutions. From chatbots to interactive voice responses, Twilio services are a key part of modern customer engagement. As businesses increasingly embrace AI for customer interactions, Twilio's role is likely to expand, making it a valuable asset in Wood's portfolio

Baidu, often referred to as the "Google of China", is a pioneer in AI research and development. It is investing heavily in autonomous driving, natural language processing and artificial intelligence-based advertising. While regulatory issues in China pose risks, Baidu's technological prowess remains a promising factor.

The inclusion of DraftKings in Wood's portfolio may seem surprising, but it reflects the growing importance of AI in the sports and entertainment sector. The company uses artificial intelligence to analyze data, make personalized recommendations and improve the user experience, especially in its daily fantasy sports offerings.

Cathie Wood's portfolio includes a diverse range of AI-driven companies, each with their own unique strengths and growth potential. While Tesla and Square shine as standout options, all of the listed stocks offer exciting prospects in the AI ​​landscape. However, investors should exercise due diligence as market conditions and industry dynamics can change rapidly. Keep a close eye on these companies as they continue to shape the future through the power of artificial intelligence.