ARK Invest Founder Cathie Wood Analyzes Market Trends in Exclusive Bloomberg Interview
Cathie Wood, founder of ARK Invest, shared her insights in an exclusive interview with Bloomberg, discussing current market trends. She believes that despite the ongoing shadows of trade friction and fiscal deficits, technology innovations led by AI will reduce costs and improve efficiency at an unprecedented pace, igniting revolutionary changes in fields such as healthcare.
(Background: Cathie Wood’s view on Crypto: Full text of ARK Big Ideas report)
Interview Highlights:
1. Trade Negotiations Show Promise, Tax Cuts Expected to Stimulate the Economy
Wood first addressed her views on the current trade situation, pointing out that behind-the-scenes negotiations seem to be moving towards reducing non-tariff trade barriers and tariffs. If achieved, this would be akin to a “tax cut,” sending a positive signal to the market. She cited the opening of U.S. beef and ethanol products to the UK market as a win-win example.
Regarding the new round of tax cut legislation being considered in Washington, Wood expressed her support. As a believer in the “Laffer curve,” she referenced the example of corporate tax rates being lowered from 35% to 21% during Trump’s previous term, which resulted in corporate tax revenues increasing from $200 billion to $500 billion, demonstrating that lower tax rates can lead to more tax revenue through corporate repatriation and enhanced competitiveness. She believes that the issue lies more in government spending approaching 24% of GDP, which should continue to be constrained.
2. AI Sparks Sudden Cost Reductions
When discussing technological innovation, Wood expressed particular optimism about the development of artificial intelligence (AI). She emphasized: “The training costs of AI are decreasing at a rate of 75% per year, while the inference costs are plummeting by as much as 85% to 95% annually.” This dramatic collapse in costs will create vast opportunities for innovative companies worldwide.
Wood noted that the U.S. once faced a risk of losing its edge in digital assets, but under the new policy environment, the tech industry is expected to thrive. She specifically cautioned that the market should not focus solely on the “Magnificent Six” tech giants, as their market values have quintupled from 2019 to 2024, while other tech-enabled innovative companies have only grown by 30% in the same period. She anticipates that the U.S. market will expand, rewarding those previously undervalued companies.
3. Focus on “Non-Traditional” Tech Stocks
When asked about specific sectors she is optimistic about, Wood named several “non-traditional” tech potential stocks:
- Multi-omics: Biotech companies benefiting from AI, such as CRISPR Therapeutics, are using gene editing technology to cure sickle cell anemia and beta-thalassemia. Twist Bioscience plays a key role in early cancer screening blood tests.
- Digital Assets: Coinbase, as a representative company, has begun to show strong momentum.
- Enterprise AI Applications: Palantir has not only successfully penetrated the U.S. Department of Defense but has also expanded its efficient solutions to other government sectors and is now included in the S&P 500 index.
- Smart Home Platforms: Roku, as a leader in the U.S. smart TV operating system, is actively expanding into global markets.
Wood pointed out that although the ARK portfolio has faced significant valuation pressure over the past four years, its relative premium to the S&P 500 has decreased from 275% to about 10% when measured by enterprise value to adjusted EBITDA. She firmly believes that in the U.S. market, innovative companies powered by technology other than the “Magnificent Six” are severely undervalued.
4. AI Enhances Government Efficiency and Defense Transformation
Regarding the relationship between government spending and innovation, Wood believes that innovation itself is part of enhancing government efficiency programs. She cited Palantir as an example, as the company assists the U.S. Department of Defense and other government agencies in replacing outdated systems, significantly improving efficiency.
Moreover, she observed that the FDA has become more transparent and simplified in its regulations, such as the first approval of software code for diagnosing heart disease and gradually reducing animal testing not applicable to monoclonal antibody development.
In the defense sector, Wood noted from the Ukraine war that warfare is becoming increasingly digitized, with expensive equipment from traditional large defense firms being challenged by more cost-effective drone technologies and other commoditized technologies. She believes this means defense spending needs to be more precisely directed towards emerging technologies.
5. AI Reshapes Healthcare
Wood holds high expectations for the application of AI in the healthcare sector, considering it the most underestimated application area of AI. She pointed out: “The human body contains 37 trillion cells, and AI enables us to effectively analyze this vast data.” She anticipates that AI will significantly lower drug development costs and shorten the time from drug discovery to market from 13 years to 8 years.
Through molecular diagnostic technologies, diseases will be detected earlier, and the healthcare system will shift from the “sick care” model, which currently accounts for 85% of U.S. healthcare spending, to therapies that can truly “cure” diseases.
She again cited CRISPR Therapeutics, whose gene editing technology has not only made breakthroughs in treating sickle cell anemia but is also expected to develop a “one-time cure” for hyperlipidemia, replacing long-term and side effect-laden statin medications.
Wood also warned traditional pharmaceutical companies that they must actively embrace AI and other emerging tools, or they risk being surpassed by startups, as traditional drug development methods are inefficient and fraught with guesswork.
