Cathie Wood buys $12 million of surging China tech stock

Yahoo

02-04-2025

Cathie Wood, the head of Ark Investment Management, usually focuses on U.S. tech stocks.
Sometimes, she also sees opportunities outside the U.S., with one of her biggest targets overseas being China, the second largest economy in the world.
That was what she did last week. She bought $12 million shares of a Chinese tech stock.
Wood's flagship fund, the Ark Innovation ETF () , is down 17.41% year-to-date as of March 31, while the Nasdaq Composite and S&P 500 lost 10.42% and 4.59% during the same period, respectively.
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Opinions on Wood vary. To her supporters, she is a visionary with a remarkable 153% return in 2020. However, her longer-term performance has raised doubts about her aggressive, opportunistic approach.
As of March 31, Ark Innovation ETF, with $6 billion under management, has delivered an annualized three-year return of negative 10.47% and a five-year return of 2.08%.
In comparison, the S&P 500 index has a three-year annualized return of 9.06% and a five-year return of 18.09%.
Wood's investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.Morningstar's analyst Amy Arnott calculated that Ark Innovation ETF destroyed $7 billion of shareholder wealth over the 10-year period ended in 2024. That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs during that period.
Wood has expressed optimism about a shift to looser regulation under Donald Trump's presidency.
She said on March 4 that the Trump administration could be even better for investors than Ronald Reagan's pro-business era, according to Bloomberg.
'The Reagan revolution — and I was there and it was so enjoyable — it was the heyday, the golden age of active equity management,' Wood said. 'That's coming back. I think it's coming back big time. I think this will dwarf that, and that was pretty good.'
But not all investors share Wood's confidence. The Ark Innovation ETF has seen a net outflow of $2.44 billion over the past 12 months through March 28, according to ETF research firm VettaFi.
On March 24, Wood's Ark funds bought 129,451 shares of Baidu Inc () .
That chunk of stock is valued at roughly $11.9 million.
Baidu, China's largest search engine, has been making developments in its artificial intelligence and autonomous mobility.
The tech giant recently launched its AI model, Ernie X1, and the advanced version, Ernie 4.5, challenging peers like OpenAI and DeepSeek. Baidu claimed that the Ernie X1 'delivers performance on par with DeepSeek R1 at only half the price.'
This isn't Wood's first bet into Baidu or the broader Chinese market. Over the years, her relationship with Chinese stocks has been a rollercoaster of bold bets and retreats.In the early 2020s, Wood was bullish on Chinese tech giants, building significant stakes in companies like Baidu, Tencent, and JD.com.
By early 2021, her funds held nearly 5 million Baidu shares worth $1 billion, driven by optimism about China's overall stock market surge and Baidu's push into electric vehicles via its Jidu Auto joint venture with Geely, which parallels her Tesla investment.
However, Wood's China investment was hit hard in 2021 as Beijing intensified its regulatory crackdown on tech firms, and she gradually reduced her stakes.
By the third quarter of 2022, ARK had completely exited its position in Baidu. Wood's recent purchase marks the first time she has bought Baidu shares in more than two years.
Wood recently told Bloomberg about how Robin Li, Baidu's CEO, is working to grow Baidu's self-driving business.
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"We had a conversation very recently with Robin Li and his team and we understand how competitive the market is in China for both autonomous mobility and large language models. But we are looking at how Robin Li is pushing the envelope. Wuhan is the toughest in China. He can take learnings from that robotaxi experience into other markets," Wood said.
"We believe that autonomous mobility in the next 5 to 10 years is going to scale globally to an $8 to $10 trillion market. If Baidu were to get any of that market even outside of China in the rest of Asia, we think that's not at all discounted in the stock," she added.
Baidu stock is up 11.28% year-to-date.Sign in to access your portfolio