The renowned investor and founder of Ark Invest, Cathie Wood, has set her sights on three disruptive growth stocks that may soon redefine their respective industries.
The first stock is a semiconductor company with a promising future amid industry challenges. It has a strong presence in robotics and the automotive sector. In contrast, the second is a leading customer engagement platform with an AI focus. It is focused on creating personalized interactions. At the same time, the third one is a pioneering biotech enterprise revolutionizing the industry.
It’s clear why Cathie Wood sees such promise in these growth stocks. Let’s dive in.
Teradyne (TER)
Wood’s Ark Invest flagship fund, the Ark Innovation ETF (NYSEARCA:ARKK), holds around 1.35 million shares of Teradyne (NASDAQ:TER). This company has a promising future underpinned by strong market fundamentals and a robust growth strategy. Despite challenges in certain segments, the overall company performance has been as expected, and there are clear signs of progress and opportunities for expansion.
The semiconductor tester market is experiencing a correction cycle driven by excess inventory, particularly impacting the mobility market. However, the sustained strength in the automotive segment and the growth of DDR5 and HBM devices for data center applications drive retooling and demand. Furthermore, the accelerating build-out of AI-enabled cloud computing is fueling demand for computing and networking.
Notably, Teradyne remains confident about the future of the semiconductor test market, with insatiable demand for increasing device complexity in various applications, including cloud and edge AI, ADAS systems and spatial computing.
The company is making strategic moves in robotics to transform its distribution channel and expand its product line. While there have been short-term impacts and challenges, the long-term potential of the robotics market remains significant. Teradyne’s innovative and market-leading products, combined with its focus on customer support and strategic partnerships, position it for success in the burgeoning human-scale automation market.
Moreover, the company also shows great promise in the automotive market, increasing semiconductor attach rates in electric vehicles and growing demand for automotive quality testing. Additionally, investments in cloud computing, especially AI-accelerated cloud computing, drive growth opportunities for Teradyne.
Teradyne’s forward-looking outlook indicates optimism for 2023 and beyond. With the semiconductor industry embracing new technologies such as three-nanometer processes and advanced packaging, the company may capitalize on the demand for longer test times and retooling.
Twilio (TWLO)
Ark Innovation ETF also has 6.93 million shares of Twilio (NYSE:TWLO), a leading force in customer engagement platforms. It focuses on creating engaging interactions across various touchpoints. With a focus on communications platform-as-a-service, Twilio has powered over a trillion interactions and acquired a segment to handle over 10 trillion data points. Its strategic split into two divisions, one for communications and the other for data and applications, aims to achieve efficiency and market capture.
Looking ahead, Twilio plans to capitalize on the AI revolution, leveraging its vast data to deliver personalized solutions. Despite economic challenges, Twilio remains confident in its medium-term growth target of 15-25% year-over-year from 2025 to 2027. It is based on Twilio’s strong core KPIs and strategic investments.
Recent customer wins, including with JPMorgan (NYSE:JPM), reaffirm Twilio’s position as a preferred solution provider. The company’s usage-based model is resilient, and revenue is expected to grow as usage rebounds. Twilio’s core offerings are well-positioned for durable growth, significantly as it expands relationships and use cases with various organizations.
Further, the recent headcount actions shifted focus from market capture to profitable growth. It is aligning the company with its next phase of evolution. Twilio aims to integrate its communication, data and applications divisions into one platform. Consequently, it may enhance customer understanding and engagement using AI, machine learning and advanced analytics.
Despite economic uncertainties, Twilio’s prudent approach and strong execution inspire confidence in investors. The company emphasizes enabling the sales team and optimizing go-to-market capabilities, driving revenue growth and long-term success. Finally, with a clear vision and commitment to profitability, Twilio may accelerate growth in the latter half of the year, earning the company its rightful spot among Cathie Wood growth stocks.
Ginkgo Bioworks (DNA)
Lastly, Wood’s ETFs have a combined 164.76 million shares of Ginkgo Bioworks (NYSE:DNA). It is a pioneering biotechnology company revolutionizing the industry with its customer-centric approach and advanced platform. Unlike focusing solely on end products, Ginkgo invests in continuously improving its platform for its diverse clientele. It includes major biopharma companies like Novo Nordisk (NYSE:NVO), Merck (NYSE:MRK) and Boehringer Ingelheim, as well as innovative startups in various fields.
The company’s advanced technology, data science and flexible automation also empower customers to make ground-breaking discoveries in their respective industries. Ginkgo’s dynamic data ecosystem and expert support accelerates research and development efforts, fostering innovation and breakthroughs.
Further, Ginkgo’s lead in constant improvement and customer feedback fosters a collaborative environment. This adaptability attracts established pharmaceutical companies and emerging startups, expanding its market reach.
Notably, Ginkgo disrupts traditional biotech startup models with high-throughput automation, eliminating costly lab build-outs and speeding up progress. Its diverse services, such as Ginkgo Enzyme, Microbe, Cell Therapy, AAV and RNA Therapeutic Services, attract new customers seeking to leverage the platform’s power. Strategic acquisitions, like the Ag Biologicals R&D group from Bayer and StrideBio, further enhance Ginkgo’s portfolio in gene therapy and other fields.
Also, the company focuses on biosecurity, ensuring responsible biological engineering applications. Ginkgo’s vigilance in safeguarding against potential threats while contributing to public health exemplifies its dedication to societal well-being.
With a continuous feedback loop and customer-centric approach, Ginkgo Bioworks remains dedicated to refining its platform and services. Also, the founders’ significant shares show their belief in Ginkgo’s growth potential.
Venturing into international markets and collaborating with federal agencies and global institutions showcases Ginkgo’s growing influence in solving global challenges. The network effect created by its biosecurity initiatives enhances the value of its services globally, contributing to a more interconnected and resilient marketplace.
As of this writing, Yiannis Zourmpanos held a long position in TWLO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
