Cathie Wood’s Strategic AI Shift: Profit-Taking at Palantir Fuels a Chipstock Surge

Cathie Wood, the visionary CEO of Ark Invest, has made headlines again with a bold rebalancing of her AI portfolio. In late April and early May 2025, Wood trimmed her position in Palantir Technologies (PLTR)—an AI software leader that had surged over 1,000% over three years—and plowed the proceeds into two AI chip giants: NVIDIA (NVDA) and Advanced Micro Devices (AMD). This strategic pivot underscores Ark Invest’s contrarian approach: selling overvalued winners to buy undervalued innovators poised for explosive growth.

Palantir: Locking in Gains on a High-Flying Stock

Wood’s reduction in Palantir, a core holding in Ark Innovation ETF (ARKK), reflects a disciplined profit-taking strategy. Despite its 57% year-to-date (YTD) gain through April 2025 and a 1,000% rise over three years, Palantir’s valuation had ballooned to a staggering 200x forward earnings multiple—far exceeding peers like Microsoft (26x) and Salesforce (24x).

The sale also came ahead of Palantir’s May 5 earnings report, amid concerns about slowing federal defense spending—a key revenue driver. While Wood retains a long-term bullish stance on Palantir’s AI-driven analytics, the timing emphasized risk management over holding a “hot” stock too long.

NVIDIA: The AI Chip Titan Reclaims Its Throne

Wood’s increased stake in NVIDIA reflects confidence in its dominance of the AI chip market. NVIDIA holds over 90% of the data center GPU market, powering large language models and generative AI systems. Despite a valuation correction from 50x to 26x forward P/E, Wood sees it as a buy at these levels.

NVIDIA’s Q4 2024 data center revenue alone hit $115 billion, driven by its H100 and H800 GPUs. Its upcoming GH200 processor, designed for exascale AI workloads, further solidifies its lead.

AMD: The Undervalued AI Infrastructure Play

The star of Wood’s new buys is AMD, which saw Ark Invest add over 212,000 shares in April-May 2025. AMD’s stock had plummeted 37% YTD due to investor skepticism, but Wood views it as a bargain at a 22.4x forward P/E.

AMD’s data center revenue soared from $2.3 billion in Q1 2024 to $3.8 billion in Q4 2024, with operating margins expanding to 29%. Its MI300X GPU, adopted by Meta and Microsoft, and its upcoming MI350 chip position it to capitalize on hyperscaler demand.

Why This Shift Matters: The AI Infrastructure Boom

Wood’s moves align with a broader trend: AI’s next phase hinges on chipmakers. As enterprises and cloud giants like Microsoft, Amazon, and Meta invest in AI infrastructure, NVIDIA and AMD are the backbone of this revolution.

• Valuation Edge: AMD’s 22.4x P/E and NVIDIA’s 26x P/E contrast sharply with Palantir’s 200x multiple, offering better risk-adjusted returns.
• Profitability: AMD’s data center margins hit 29% in Q4 2024, while NVIDIA’s gross margins remain industry-leading at 60%.
• Market Momentum: AMD’s partnerships with Meta (using its chips for in-house AI projects) and Microsoft (Azure cloud) signal sustained demand.

Conclusion: Betting on the AI Infrastructure Stack

Cathie Wood’s April-May portfolio adjustments paint a clear picture: the AI boom is no longer just about software disruptors like Palantir. It’s about the hardware that enables them. By cutting overvalued stocks and doubling down on AMD and NVIDIA—two companies driving the AI chip revolution—Wood is positioning Ark Invest to profit from the next wave of AI adoption.

The data backs this strategy:
- NVIDIA’s data center revenue growth has averaged 42% annually over five years.
- AMD’s data center revenue grew by 65% in 2024, with margins expanding despite industry cyclicality.
- Both stocks trade at half the valuation of Palantir, yet their market positions are far more defensible.

As Wood famously noted, “The future is not for the faint-hearted.” In this case, the future is in silicon—and Ark Invest is ready to ride it.