ARK's Semiconductor Contrarian Play: Betting on Chips Over EVs in a Tech Crossroads

In a market oscillating between AI euphoria and EV skepticism, ARK Invest's recent trades signal a bold contrarian stance. Cathie Wood's $12.7 million bet on AMD and $45 million in TSMC purchases—contrasting with sizeable sales in overhyped EV stocks—highlight a strategic pivot toward semiconductor leaders. This move underscores a belief that AI/5G-driven innovation will outpace EV sector saturation, offering investors a chance to reallocate capital to undervalued tech pillars.

The Semiconductor Surge: AMD and TSMC as AI Infrastructure Champions

At the heart of ARK's shift is a conviction that semiconductors are the unsung heroes of the next tech revolution. Take AMD: its $12.7 million stake (augmented by a $10.7 million May purchase) reflects its role as a critical supplier to AI data centers. The company's MI300X chip, which Oracle and xAI are adopting, has propelled data center revenue to a 57% year-over-year jump in Q1 2025.

[text2img]AMD's MI300X chip, powering AI workloads, sits alongside TSMC's 3nm silicon—a visual of the hardware driving the AI boom.[/text2img]

Meanwhile, TSMC's $45 million in ARK purchases (a mix of $38.4 million in May and additional buys) spotlights its dominance in advanced manufacturing. The firm's 3nm and upcoming 2nm nodes are indispensable to AI giants like NVIDIA and AMD. With Q2 2025 revenue projected to hit $28.4 billion—a 13% year-over-year jump—TSMC's 20% CAGR valuation looks compelling. Analysts have already raised price targets to $219.43, a 11% premium to its current price.

EVs: The Overhyped Sector Losing Momentum

ARK's simultaneous sales of EV stocks—most notably $9.29 million in Tesla shares—paint a stark contrast. While EVs have been a decade-long darling, the sector is now grappling with overcapacity, regulatory hurdles, and slowing demand. Tesla's struggles to monetize its software stack and the rising competition from legacy automakers have pushed its valuation to unsustainable levels.

Wood's reduction in EV exposure aligns with a broader thesis: the market is finally recognizing that EV adoption, while real, is maturing. With global EV sales projected to grow at just 15% annually by 2030 (down from 50% in 2020), the sector's best days are behind it.

Why Now? The AI/5G Inflection Point

ARK's timing is strategic. The AI boom is accelerating semiconductor demand, with AI-specific chips now accounting for 30% of TSMC's revenue. Meanwhile, 5G infrastructure rollouts and edge computing are further fueling demand for advanced silicon.

AMD's data center revenue—now 40% of total sales—signals its shift from a PC-centric firm to a key AI supplier. TSMC's $65 billion U.S. investment and $100 billion global expansion plan lock in its foundry leadership, insulating it from geopolitical risks.

Investment Implications: Follow the Contrarian Play

Investors should heed ARK's moves as a roadmap for 2025 and beyond:
1. Buy TSMC: Its valuation at 21x forward P/E is a steal compared to AMD (28x) and NVIDIA (32x). The stock's 11% upside to $219.43 offers asymmetric reward.
2. Add AMD: Its AI chip partnerships and data center growth justify a $144–150 price target.
3. Avoid Overhyped EV Names: Tesla's valuation (50x forward P/E) and slowing margins make it a prime candidate for rotation into semiconductors.

Conclusion: The Tech World is Semiconductors

ARK's pivot isn't just about stock picking—it's about recognizing that semiconductors are the backbone of the AI era. While EVs compete for market share in a saturated space, AMD and TSMC are solving foundational tech challenges. For investors, this is a chance to back the infrastructure of tomorrow at a discount. The contrarian play isn't about following trends—it's about betting on the companies that power them.

The market's next big move won't come from wheels on the road but from chips under the hood.