Cathie Wood Says Software Is the Next Big AI Opportunity -- 2 Ark ETFs You'll Want to Buy if She's Right

Cathie Wood, the founder of Ark Investment Management, has positioned her ETFs, ARKK and ARKQ, to align with her prediction that software companies will be the next big opportunity in the artificial intelligence (AI) industry. If Wood's prediction proves accurate, investors may want to consider buying these ETFs to capitalize on the growth of AI software. Here's how these ETFs align with Wood's prediction and which companies within them are likely to benefit from the growth of AI software.



ARKK (Ark Innovation ETF) and ARKQ (Ark Autonomous Technology and Robotics ETF) both hold significant positions in Tesla (TSLA), highlighting Wood's conviction in the company's autonomous driving capabilities. Tesla's annual revenue is expected to grow more than tenfold to $1.2 trillion by 2029, with 63% coming from its full self-driving (FSD) software and the Cybercab platform. This growth potential is driven by the increasing demand for autonomous vehicles and the integration of AI software into various industries.



Roku (ROKU) is another company held by ARKK that benefits from AI software. Roku uses AI to direct relevant content to users, creating a more engaging experience. Its latest smart TVs use an AI software feature called Smart Picture to optimize the display depending on what you're watching. As AI adoption spreads, companies like Roku that leverage AI to enhance their products and services are likely to see increased demand and growth.

Palantir Technologies (PLTR) is another AI software stock held by ARKK. Palantir's software helps organizations integrate, manage, secure, and analyze data. Its AI-driven platform, Foundry, enables users to build and deploy AI models at scale. As AI becomes more prevalent in various industries, companies like Palantir that provide AI software solutions will likely see increased demand and growth.

ARKQ also holds positions in companies like Kratos Defense (KTOS) and Teradyne (TER), which benefit from AI software in their respective industries. Kratos Defense designs and manufactures unmanned systems, including autonomous fighter planes and trucks, which can benefit from advancements in AI software. Teradyne helps businesses automate their processes using AI-driven robots capable of transporting products and equipment around manufacturing facilities.

Amazon (AMZN) is another company in ARKQ that benefits from AI software. Amazon Web Services (AWS) offers AI services like Amazon SageMaker, which enables developers to build, train, and deploy machine learning models. As AI adoption spreads, companies like Amazon that provide AI software solutions will likely see increased demand and growth.



Investing in AI software companies presents several key risks and challenges, including data management and privacy, technological obsolescence, regulatory uncertainty, talent acquisition and retention, and ethical concerns and bias. To mitigate these risks, investors can conduct thorough due diligence on the company's data management practices, R&D efforts, regulatory compliance, talent acquisition and retention strategies, and ethical AI development. Diversifying their portfolio to include multiple AI software companies with different strengths and risk profiles can also help mitigate risks.

In conclusion, Cathie Wood's prediction that software companies will be the next big opportunity in the AI market is supported by the growth potential of AI software and the increasing demand for AI-driven solutions. If Wood's prediction proves accurate, investors may want to consider buying ARKK and ARKQ to capitalize on the growth of AI software. However, it is essential to conduct thorough research and consider the risks and challenges associated with investing in AI software companies before making any investment decisions.