News: Cathie Wood’s ARKK dumped Nvidia stock before $560 billion surge

Cathie Wood's Ark Invest may be regretting its decision to sell nearly 1 million shares of Nvidia between October and the present, as the chipmaker's stock has surged over 160% year-to-date.

Following Nvidia's announcement of impressive guidance and benefiting from the demand for its chipsets supporting generative AI technology platforms, such as OpenAI's ChatGPT and Alphabet's Bard, the stock soared up to 30% on Thursday.

Ark Invest, which has owned Nvidia on and off since its flagship fund's inception in 2014, missed out on significant gains as it began reducing its position in Nvidia before a 52-week low in mid-October.

Since the initial sale on October 5, when Ark Invest held 1.3 million shares of Nvidia across its ETFs, the stock has surged 190% and added $620 billion to its market value. By late November, Ark Invest owned just over 500,000 shares.

Currently, Ark Invest holds only 390,000 shares across its suite of next-generation technology ETFs, with Nvidia not being included in its flagship Disruptive Innovation fund.

Based on rough calculations, Ark Invest potentially missed out on over $200 million in profits when it sold down its Nvidia stake in late 2020.

This ill-timed share sale highlights the challenges of actively managing a portfolio focused on disruptive investments. Even if the right investment theme is chosen, there is no guarantee of picking the right companies to bet on.

In February, Wood explained that Ark's decision to sell Nvidia was due in part to its "very high" valuation and the consolidation of its portfolio into higher conviction names.

Wood has turned to UiPath as Ark Invest's exposure to artificial intelligence, which is the second-largest position across its ETFs. Tesla remains the top holding for Ark Invest, as it also works on AI technology for its self-driving capabilities.

However, despite the AI hype this year, these two stocks have captured only a portion of the year-to-date gains seen in the sector. UiPath shares have increased by just 14% year-to-date, while Tesla stock has risen by an impressive 50%.

On Thursday, Ark Invest's Disruptive Innovation ETF experienced a 2.7% decline, despite the Nasdaq 100 index rising by 1.7%.