Cathie Wood's Latest Picks: 3 Stocks She Just Acquired

Cathie Wood’s Recent Stock Picks: AMD, Airbnb, and Figma

Cathie Wood, the CEO of Ark Invest, has been making waves in the investment world with her strategic stock picks. Her flagship ETF has seen a remarkable 77% increase over the past year, outperforming the broader market. Investors are closely watching her moves, especially as she recently added to her funds’ positions in Advanced Micro Devices (AMD), Airbnb (ABNB), and Figma (FIG). These three stocks represent a mix of opportunities and challenges, offering insights into both short-term hurdles and long-term potential.

Advanced Micro Devices (AMD)

AMD has experienced a rollercoaster ride for investors. The chipmaker saw its shares more than double since hitting a low in early April, but the stock is only up about 5% over the past year. Despite this, there are compelling reasons to consider AMD. The demand for generative artificial intelligence (AI) is driving tech companies to build new data centers, and AMD plays a key role in this space. However, the company's growth has slowed, with revenue increasing by 32% in the second quarter and management forecasting 28% growth in the current quarter.

Analysts have expressed concerns about AMD’s valuation, with some downgrading the stock due to high price-to-earnings ratios and weak operating margins. Additionally, trade tensions have impacted sales of its Instinct MI308 GPUs in China. Still, AMD’s client and gaming segments are showing strong growth, with sales rising 69% in the second quarter.

Airbnb (ABNB)

Airbnb has faced its share of challenges, with the stock up just 4% over the past year. While the company has seen four consecutive years of revenue growth, the latest quarter showed a 13% year-over-year increase, which is its strongest result in over a year. However, several factors could affect its future performance. Trade war rhetoric may deter international travel, and the shift back to office work could reduce the need for remote work-related stays. Additionally, the U.S. economy’s softening could impact consumer confidence and spending on vacations.

Despite these concerns, Airbnb remains profitable, generating $4.3 billion in free cash flow over the past year. The company also announced a $6 billion share buyback authorization, and it trades at a historically low 25 times forward earnings, making it an attractive option for value-conscious investors.

Figma (FIG)

Figma, the cloud-based design tool provider, made headlines with its initial public offering (IPO) at $33 per share. The stock surged to $143 on its second day of trading due to high demand, but it has since dropped more than 60% from its peak. While not considered cheap, the recent decline has created a potential entry point for investors.

Figma continues to show strong growth, with revenue increasing by 48% last year. Although the growth rate has slowed this year, it still maintains a healthy pace. The company operates in a competitive space but is expanding its appeal to a growing audience. Its higher earnings multiple compared to AMD and Airbnb makes it a riskier bet, but the pullback after the IPO pop could offer an opportunity for those willing to take on the challenge.

Conclusion

Cathie Wood’s recent investments in AMD, Airbnb, and Figma highlight the complex interplay of short-term challenges and long-term potential in the stock market. Each of these companies presents unique opportunities and risks, requiring careful consideration from investors. As the market continues to evolve, staying informed about these dynamics can help shape better investment decisions.