ARK's Dual Move: Buying Broadcom While Trimming Roku

The specific catalyst is clear. On Thursday, January 9, ARK Invest added to its existing stake in Broadcom (AVGO), a move that followed a pattern of tactical rebalancing. Just two days earlier, on January 7, the fund executed a $2.29 million sale of Roku Inc. (ROKU) stock. This isn't an isolated trade. It follows a recent trend where ARK has been trimming high-flying winners, including a $11.2 million Tesla sale last week and a $6.5 million Coinbase divestment earlier this week.

Viewed together, these moves signal a deliberate rotation. ARK is taking profits from stocks that have run hard and are now trading at premium valuations, freeing up capital to deploy into areas with more immediate visibility into the AI infrastructure build-out. The purchase of Broadcom, a semiconductor and tech infrastructure leader, fits this thesis perfectly. The company is a seven-bagger over the past five years and is positioned at the heart of the AI boom, with more than 99% of global internet traffic crossing its technology. By contrast, Roku, despite a 42% gain last year and a recent 10% monthly rally, represents a more cyclical, advertising-driven growth story that may be less compelling in the near term.

The core question is whether this marks a strategic shift for ARK's 2026 playbook. The pattern suggests it does. After a stellar 2025 where its flagship fund surged nearly 38%, ARK appears to be rotating capital from high-multiple, high-growth names into a premium semiconductor play with stronger near-term AI infrastructure visibility and, potentially, more stable cash generation. This is classic active management: locking in gains from a hot run to fund new, high-conviction bets. The immediate setup is a fund trimming a winner to buy a premium infrastructure name, betting that the latter offers a better risk/reward in the current market cycle.

The Mechanics: Why Broadcom Now?

The move into Broadcom is a direct play on the AI infrastructure build-out, targeting a company with unmatched scale in the digital plumbing. The fund's rationale is clear: Broadcom claims that more than 99% of global internet traffic crosses through some type of its technology. In the current market cycle, that positioning is a near-term growth catalyst. Analysts model a 51% jump in revenue to $96 billion for the new fiscal year, a pace that justifies the stock's premium valuation. This isn't speculative; it's a bet on the physical layer of the AI boom.

The stock's recent performance aligns perfectly with ARK's momentum-focused strategy. Broadcom has delivered a 34% gain over the past year, a powerful move that has kept pace with the fund's own stellar returns. By buying on Thursday, ARK is chasing this momentum into a high-conviction, high-barrier-to-entry business. The company's consistency adds another layer of appeal, having rattled off 16 consecutive fiscal years of revenue growth and boosting its dividend for 15 straight years.

This purchase stands in contrast to ARK's recent sales of crypto-exposed names, highlighting a rotation into more stable, cash-generative tech. Just last week, the fund sold $6.5 million worth of Coinbase shares, and earlier this month it offloaded nearly $44 million of the same stock. These moves, driven by price targets and portfolio weightings, signal a shift away from volatile, sentiment-driven assets. Broadcom offers a similar growth narrative but through a more predictable, infrastructure-based model. The bottom line is that ARK is using profits from a rally in crypto to fund a bet on the underlying hardware that makes that rally possible.

The Counterpoint: Why Trim Roku?

The sale of Roku is a textbook example of active portfolio management in action. The stock had been a standout performer, delivering a 42% gain in 2025 and a 10% monthly run before the trim. This powerful rally, driven by a fundamental shift to a profitable platform business, pushed the stock into a position where ARK's own rules dictated a sale. The fund operates under a target weighting of no individual holding exceeding 10% of its total value. As Roku's price climbed, its portfolio weight grew, triggering the need to sell to maintain the fund's strategic balance.

This isn't a vote of no confidence in Roku's story. The company's fundamentals are strong, with a recent quarter showing robust platform revenue growth and a clear path to profitability. The move is about managing risk and capital allocation. After a stellar run, ARK is locking in gains from a high-multiple growth story to fund new bets elsewhere. It's a disciplined rebalancing act, similar to the recent Coinbase sales that followed its own record highs.

The strategic shift is clear. ARK is rotating capital from a pure-play connected TV and advertising growth story into a more infrastructure-focused semiconductor play. The sale of Roku frees up capital that can now be deployed into areas like AI infrastructure, where the growth visibility is more immediate and the cash generation more predictable. In essence, ARK is trading a high-flying, cyclical growth story for a premium-positioned, cash-generative infrastructure leader. This is the tactical pivot of a fund that has already captured significant gains and is now looking to redeploy them into what it sees as the next leg of the AI investment cycle.

The Risk/Reward Setup: Valuation vs. Growth

The immediate trade is a classic bet on execution versus valuation. ARK is paying up for Broadcom's premium positioning, and the risk is that the stock's 33 times forward earnings multiple leaves little room for error. This high multiple makes the shares sensitive to any slowdown in AI spending or a stumble in the company's ambitious growth plans. The primary risk is that the current price already reflects near-perfect execution, leaving the stock vulnerable to disappointment.

The opportunity, however, is tied directly to the execution of Broadcom's AI roadmap and its ability to maintain pricing power in critical infrastructure. The fund's rationale is that the company is growing faster than its valuation multiple. Analysts model a 51% jump in revenue to $96 billion for the new fiscal year, a pace that justifies the premium if achieved. This isn't a bet on a single product, but on the company's unmatched scale in the digital plumbing that underpins the AI boom. Its claim of more than 99% of global internet traffic crossing its technology provides a durable moat.

The next catalyst to confirm this thesis will be the company's upcoming quarterly earnings and guidance. That report will be the first concrete data point on whether AI-driven demand is materializing as projected. For ARK, the timing of this purchase suggests the fund sees the current setup as a high-conviction entry point before that confirmation. The risk is paying up now; the reward is capturing the next leg of infrastructure growth before the broader market fully prices it in.