Money manager Cathie Wood, the CEO of ARK Investment Management, has recently voiced concerns about a potential market correction in the semiconductor sector.
Market Correction Warning: In a recent interview with Bloomberg Businessweek Radio, Wood highlighted the potential for a market correction in the semiconductor industry due to improvements in the supply chain.
Wood emphasized, “The one place we could see a correction — and it’s just a correction, we’re not calling it the end of this at all — is in the chip space.”
Despite being top performers this year, Wood pointed out that semiconductor stocks, including NVIDIA Corporation NVDA, could be at risk.
Nvidia’s shares have surged around 80% this year, following a remarkable 240% increase in 2023.
Wood, who initially invested in Nvidia in 2014, mostly divested her position before the company’s rally last year.
Addressing the shortages in GPUs that peaked last year with the rise of AI tools like OpenAI’s ChatGPT, Wood noted that lead times for GPUs, particularly Nvidia, have decreased significantly.
“So that is suggesting that there was probably a lot of double and triple ordering as the word ‘shortage’ was making the rounds, and then those inventories will have to be digested,” she added.
Prior Moves: Despite expressing concerns about Nvidia’s valuation and unloading its shares, ARK added $4 million worth of stock in the chipmaker’s supplier, Taiwan Semiconductor, earlier this week.
Wood’s firm, ARK Investment Management, also made headlines earlier this year by trimming its positions in two major chip stocks, Nvidia Corp. and Advanced Micro Devices, Inc. AMD, ahead of their Q4 results.
Renowned finance professor Jeremy Siegel, known as the “Wizard of Wharton,” cautioned about the soaring valuations of tech stocks, particularly Nvidia. He warned that the current enthusiasm might indicate a potential bubble.
Wood’s Perspective: Last month, when Nvidia added $273 billion in value in a day, Wood stated, “We’re just pivoting to another set of plays that most people have not discovered yet. Much like they did not understand that Nvidia was an AI play until very recently.”
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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