Is Cathie Wood Losing Faith in Nvidia (NVDA) Stock?


  • Cathie Wood’s ARK Invest has reduced its stake in Nvidia (NVDA).
  • This comes as the chipmaker is getting ready to report Q2 earnings.
  • The fund increased its stake in Zoom (ZM), another company that reported earnings this week.
NVDA stock - Is Cathie Wood Losing Faith in Nvidia (NVDA) Stock?

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Until today, things looked great for Nvidia NASDAQ:NVDA) stock as it prepared to report second-quarter earnings.

The company had issued weaker-than-expected revenue guidance for the quarter. But even disappointing preliminary financials hadn’t pushed NVDA stock down by too much. The company still remained a favorite among institutional investors. “Hedge funds are betting that Nvidia’s sales will rebound after Q2. Chances are better that the sales will grow after Q1 of 2023, but investors cannot predict how soon the excess supply of Nvidia’s products will be cleared,” reported InvestorPlace contributor Chris Lau.

Not everyone is so bullish on NVDA stock, though. In fact, two of Cathie Wood’s exchange-traded funds recently offloaded NVDA shares. As MarketWatch reports, “Wood hasn’t been that active in the stock, and her previous trades in the stock this year were all buys.”

Let’s take a closer look at why Wood would offload shares so close to earnings and what it means for NVDA stock.

NVDA Stock: Trouble Ahead Post Earnings?

While it appears Wood has lost faith in Nvidia, she hasn’t written the company off completely. The ARK Innovation ETF (NYSEARCA:ARKK) sold $40 million worth of NVDA stock while the ARK Next Generation ETF (NYSEARCA:ARKW) sold $11 million. Neither EFT has cashed out of Nvidia completely.

ARKK now holds only 495,071 shares, worth roughly $85 million. ARKW has less, holding 86,544 shares of NVDA stock with a value just under $15 million.

Wood’s history of betting on beaten down stocks is well known. Two top holdings in both funds are Coinbase (NASDAQ:COIN) and Roku (NASDAQ:ROKU), both down more than 70% for the year. But even Wood’s contrarian mentality wouldn’t push her to sell a stock unless she saw it as a market loser.

On top of that, she clearly predicts that Nvidia will report poor earnings or she wouldn’t have opted to sell before the report.

Bears Are Circling

Wood isn’t the only expert to take a bearish perspective on Nvidia. While NVDA is rated as a “strong buy” on TipRanks, several analysts aren’t so optimistic. Joseph Moore of Morgan Stanley recently issued a price target of $182 for NVDA stock, reiterating a “hold” rating due to perceived weakness in the gaming sector. He also expects to see positive numbers from Nvidia’s rival Marvell Technology (NASDAQ:MRVL). Either or both could be factoring into Wood’s bearishness.

Nvidia could still surprise investors when it reports earnings. However, Wood’s trimming of her exposure to the company won’t help NVDA stock rise in the short term.

If Nvidia can surprise the bearish analysts, shares may bounce back quicker than expected.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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