Cathie Wood, chief of Ark Investment Management, often trims her biggest winners after sharp rallies.
This week, she's selling Tempus AI (TEM), taking some shares off the table after the healthcare AI stock surged nearly 30% in days and became the second-largest holding in her fund.
Last year, the flagship Ark Innovation ETF gained 35.49%, far outpacing the S&P 500's return of 17.88% in the same period. So far this year, Wood's flagship Ark Innovation ETF (ARKK) is up 10.16% as of Aug. 26, while the S&P 500 surged 12.13%, Yahoo Finance data show.
Wood gained a reputation after the Ark Innovation ETF delivered a 153% return in 2020. But her style also brings painful losses in bearish markets, as seen in 2022, when the Ark Innovation ETF tumbled more than 60%.
Those swings have weighed on Wood's long-term gains. As of Aug. 26, her Ark Innovation ETF has delivered a five-year annualized return of -6.21%, while the S&P 500 has an annualized return of 11.42% over the same period, according to data from Morningstar.
Wood usually focuses on high-tech companies across artificial intelligence, blockchain, biomedical technology, and robotics. She believes these businesses have strong growth potential, though their volatility often causes fluctuations in the Ark's funds.
Over the decade ended 2025, the Ark Innovation ETF wiped out nearly $5 billion in investor wealth, according to an analysis by Morningstar's analyst Amy Arnott. That made it the fourth-biggest wealth destroyer among mutual funds and ETFs in the ranking.
Wood remains optimistic about AI, which she sees as a major driver of productivity, economic growth, and corporate profits in the years ahead.
In an Aug. 9 post on X (the former Twitter), Wood said U.S. corporate profits remain unusually strong, with domestic profits before tax at 13.2% of GDP, a level she said is near multi-decade highs.
Related: Cathie Wood buys $28.1 million of popular tech stock
Some of that strength came from the massive monetary and fiscal stimulus during the pandemic, but Wood believes another factor is helping sustain margins today: companies are leaning into AI and productivity gains to protect them.
"I think we're still early in seeing how far that can go," she said, adding that companies that use AI effectively will "separate themselves from the ones that don't."
Wood also found reasons for optimism in the latest U.S. jobs report, despite nonfarm payrolls falling by 23,000.
"It's not as scary as it looks," she said, pointing to higher prime age labor force participation, cooling wages and productivity growth approaching 3%. She also suggested AI may be helping accelerate baby boomer retirements.
Not all investors agree with Wood's optimism. Over the past 12 months through Aug. 25, the Ark Innovation ETF saw roughly $1.7 billion in net outflows, according to data from ETF research firm VettaFi.
