Ark Invest CEO, Cathie Wood, just dropped $18.5 million on Nvidia shares through her flagship innovation fund. Nvidia trades near its all-time high, according to TheStreet.
For millions of retail investors who track Wood’s every trade, this purchase raises an obvious question: Should you follow her lead into Nvidia, or is she chasing momentum at exactly the wrong time?
Why Wood’s trades capture attention
Wood has become something of a folk hero among retail traders, particularly after her Ark Innovation ETF delivered 153% returns in 2020.
Her willingness to make bold bets on disruptive technologies in AI, robotics, and blockchain has earned her a devoted following and turned her investment moves into must-watch events.
But here’s what makes her recent Nvidia purchase particularly intriguing. TheStreet reports that Wood completely sold out of the stock back in 2022.
Now she’s diving back in, having started accumulating shares in April during a brutal tech sell-off. Her funds bought 128,163 Nvidia shares on June 16, signaling renewed confidence in the AI chipmaker.
The timing seems calculated. Wood has been gradually building her Nvidia position as trade tensions ease between the U.S. and China. She’s also betting that the Trump administration’s decision to scrap certain AI export restrictions could boost Nvidia’s growth prospects.
The bull case for following Wood’s bet
TheStreet explains the reason that Nvidia has captured Wood’s attention again. The company just posted stellar quarterly results, with adjusted earnings of 96 cents per share on $44.06 billion in revenue, both beating Wall Street expectations.
Even with export restrictions crimping sales, the business continues to fire on all cylinders.
Wood likely sees this as part of a bigger story. In a recent letter to investors, she painted an optimistic picture of a productivity boom driven by AI and other emerging technologies. If she’s right, companies like Nvidia could be at the epicenter of massive economic transformation.
Wall Street analysts seem to agree, at least partially. The average price target for Nvidia sits at $173.19, suggesting about 19% upside from recent levels. While the forecast is relatively modest, it suggests analysts still see potential for further gains
The sobering reality check
Before you rush to follow Cathie Wood’s trades, consider this sobering fact. Over the 10 years ending in 2024, her ARK Innovation ETF, a type of investment fund that trades on the stock market like a regular stock, has lost around $7 billion for investors, according to Morningstar analyst Amy Arnott. That makes it the third-worst performer among all mutual funds and ETFs.
The fund’s five-year average return is actually negative, at –0.3 percent per year. By comparison, a simple S&P 500 index fund gained 15.7 percent annually during the same period.
Wood’s strategy is high-risk, high-reward. When her tech picks perform well, the gains can be dramatic. When they do not, the losses are steep. In 2022, for example, the fund fell more than 60 percent. Even now, with a 15.9 percent gain year-to-date, investors have pulled $2.4 billion from the fund over the past 12 months.
Hidden risks in Nvidia’s story
Nvidia faces real headwinds that could derail its momentum. China remains crucial to the company’s success, accounting for 13% of sales. But ongoing trade tensions and potential new export restrictions could hit hard.
Nvidia’s own guidance suggests export curbs would have cost it roughly $8 billion in additional revenue for the July quarter.
CEO Jensen Huang hasn’t been shy about warning that these restrictions could ultimately threaten America’s tech leadership. “If we want the American technology stack to win around the world, then giving up 50% of the world’s AI researchers is not sensible,” Huang recently told CNBC. “So long as all the AI developers are in China, you know, I think [the] China stack is going to win.”
Trading near all-time highs also means there’s limited margin for error. Any disappointment from earnings, new regulations, or broader market weakness could trigger sharp declines.
An approach for everyday investors
Instead of blindly following Cathie Wood or any other celebrity investor, consider these more practical strategies:
- Diversify your AI exposure: Rather than betting everything on Nvidia, consider AI-focused ETFs that spread your investment across multiple companies. This gives you exposure to the sector’s growth without the risk of relying on a single stock.
- Size your positions wisely: If you buy individual AI stocks, keep them to a small percentage of your investments, around 5 percent or less. Wood can afford concentrated bets. Most investors cannot.
- Use dollar-cost averaging: Rather than investing a lump sum near a peak, build your position gradually over time. This reduces the risk of bad timing.
- Do your own research: Wood’s team spends countless hours analyzing companies. Unless you’re willing to do the same, following her trades is essentially a leap of faith.
- Know your time horizon: Wood invests with a long-term mindset and is comfortable with big swings along the way. If you need your money sooner or cannot stomach a 50 percent drawdown, her approach may not be right for you.
A professional advisor could be worth consulting if you have $100,000 or more to invest and want help evaluating whether a high-risk strategy fits your goals. WiserAdvisor is a free service that matches you with vetted advisors in your area.
What everyday investors can learn
Cathie Wood’s Nvidia buy signals strong conviction in AI’s future, but her track record reminds us that even bold bets can go painfully wrong or pay off too late for most investors to benefit.
The real takeaway is not whether to copy her trades. It is to ask whether any investment fits your goals, risk tolerance, and time horizon. Her decisions can be useful signals, but they should never replace your own judgment.
Investing success is not about chasing headlines. It comes from having a strategy you believe in, sticking with it, and staying grounded when the market gets noisy.
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