Cathie Wood: 3 Bargains She Just Snapped Up

Unassuming, steady performers are tough to find. Almost all the standout stocks get bid up so swiftly that they become crowded trades, as Wall Street puts it. But this week has been a treat for me, as three underappreciated companies that Cathie Wood has been buying -- Advanced Micro Devices (AMD), Iridium (IRDM), and Tempus AI (TEM) -- have been delivering the goods without missing a beat. Let's dive into these hidden gems.

Advanced Micro Devices (AMD) has been a bit of a rollercoaster this year, but Wood's recent purchases suggest she sees value in the company's AI chips business. In the latest quarter, revenue from the data center segment, which includes AI chips, skyrocketed 122%. Despite recent layoffs and a chief accounting officer resignation, AMD's fundamentals remain strong, and the company is well-positioned to capitalize on the AI trend. Wolfe Research's checks suggest that AMD's AI business will amount to $7 billion for all of next year, shy of the roughly $10 billion its peers are modeling. However, AMD's AI chips business is still a significant growth driver, and Wood's purchases indicate that she believes in the company's long-term potential.

Iridium (IRDM) is another stock that Wood has been buying recently. The chemical element that bears its name may be corrosion-resistant, but the same can't be said about the data and voice satellite communications specialist as an investment in 2024. IRDM stock has fallen 28% this year. Iridium's growth has been sluggish, clocking in with single-digit revenue growth in five of the last six years. Its latest update calls for service revenue -- accounting for the lion's share of its business -- to climb 5% for all of 2024. Wall Street pros see that pace decelerating in 2025. Despite these challenges, Wood sees value in Iridium's specialized services and its strength in both government and commercial markets. Iridium's reach of nearly 2.5 million total billable subscribers, an 11% jump over the past year, also makes it an attractive investment for Wood.

Tempus AI (TEM) is another stock that Wood has been buying recently. The provider of practical applications for the healthcare industry has seen its shares give back all those gains and then some since peaking in November. The 56% plunge since peaking in November is rough, but Wood seems to think that the pessimism surrounding Tempus AI's recent performance may be overdone. Tempus AI may be far from turning profitable, but its growing line of diagnostic tools should excite risk-tolerant investors. Wood has added to her position on nine different trading days in December, indicating her confidence in the company's long-term prospects.

These three stocks fit into Ark's thematic investment approach in several ways. AMD's AI chips business aligns with Ark's focus on AI, while Iridium's specialized services and strength in both government and commercial markets make it a logical play in Ark's investing universe of disruptors. Tempus AI's growing line of diagnostic tools also aligns with Ark's focus on innovative companies that can disrupt traditional industries.

Wood's purchases of these three stocks reflect Ark's focus on disruptive innovation and long-term growth. By investing in companies like AMD, Iridium, and Tempus AI, Ark can tap into the growth potential of these innovative technologies. These acquisitions also contribute to Ark's goal of identifying high-impact innovations that cut costs, span sectors and geographies, and foster more innovation.

In conclusion, Cathie Wood's recent purchases of Advanced Micro Devices, Iridium, and Tempus AI demonstrate her commitment to finding bargain opportunities in the market. By investing in these underappreciated companies, Wood is positioning Ark Invest to capitalize on the growth potential of these innovative technologies. As always, it's essential to do your own research and consider your risk tolerance before making any investment decisions.