Disruptive innovation investor Cathie Wood has not shied away from buying beaten-down tech stocks on the dip in recent weeks. Her Ark line of funds has struggled to beat the rest of the market, especially the tech- and growth stock-focused Nasdaq 100.
Indeed, the relative underperformance can largely be attributed to the higher interest rate environment. Many of the most exciting disruptive technology companies owned in the Ark funds are either unprofitable or wildly expensive, and things seem less likely to change over time as they focus on growth above all else.
Indeed, disruptive innovation stocks could continue to tread water for some time as the Fed cuts rates into a slowing economy. But for investors who want growth beyond the mega-cap tech (most notably the Magnificent Seven companies that have been sagging lately), some of the Cathie Wood stocks are worth watching as they try to recover.
This piece will examine a trio of the most promising Cathie Wood innovation stocks in the ARK Next Generation Internet ETF (NYSEARCA:ARKW).
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) stock has been under serious pressure since the global IT outage took the world by storm.
Was it a historic outage? Definitely. Were there massive financial damages caused by the disruption? Sure, but it seems like all the negatives of the disaster have been more than priced in here. After all, CRWD stock is now down more than 40% from its early July peak!
That’s a vicious crash and one that’s probably overblown by now. Cathie Wood’s been braving the Crowdstrike share sell-off (she recently bought $12 million shares on the dip). As time passed and the Crowdstrike-linked outages became old news, I think the odds are high that Wood’s latest bets will look incredibly well-timed.
Crowdstrike offers a next-generation cybersecurity solution in a new-age internet of increasingly dangerous AI-enhanced threats.
Palantir (PLTR)
Palantir (NASDAQ:PLTR) is another interesting and less obvious AI play within Cathie Wood’s ARKW fund. In the past week, PLTR stock has gained ground even as tech stocks imploded, leading the rest of the market to one of the worst days in almost two years.
The company’s better-than-expected quarterly result powered its shares to a more than 10% gain on Tuesday, which may just be the start of a sustained rally as more investors realize how good the latest June quarter was.
With strong guidance for its coming June quarter (now pinned at $697-701 million) and buzz surrounding its AI Product (AIP), Palantir seems ready to ride the AI bull higher as the Magnificent Seven trade runs out of steam. After such a strong showing from CEO Alex Karp and the company, it’s hard not to want to get back into the AI waters despite last week’s plunge.
Of all the Cathie Wood innovation stocks with AI upside, PLTR stock stands out even if shares seem wildly expensive today at more than 76 times forward price-to-earnings (P/E).
Coinbase (COIN)
Coinbase (NASDAQ:COIN) is another intriguing Cathie Wood innovation stock that’s about more than Bitcoin (BTC-USD). The company may very well be laying down the foundation for the future of cryptocurrency and blockchain technology.
With COIN stock coming in, now down more than 30% from 52-week highs, investors seeking a profitable Bitcoin proxy may have an opportunity to pounce. At writing, shares of Coinbase go for 28.1 times forward P/E.
That’s cheap, perhaps too cheap for a company that may have a lot to gain as it seeks to take share in the booming digital wallet scene. All considered, Coinbase is one of the most intriguing Cathie Wood innovation stocks to keep tabs on as interest in Bitcoin and alternative assets readies for (hopefully) another leg higher. Reportedly, Wood has been adding to her Coinbase position of late amid market choppiness.
On the date of publication, Joey Frenette 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 InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
