Nvidia Corp. NVDA has fallen out of favor with Cathie Wood-run Ark Investment Management not due to a lack of confidence in its fundamentals, but rather because of its stretched valuation. While Ark’s flagship exchange-traded fund, Ark Innovation ETF ARKK, has cashed out of Nvidia and other Ark funds are gradually trimming their Nvidia holdings, the firm on Monday bought shares of a key supplier of the chipmaker.
What Happened: Ark, through its ARK Next Generation Internet ETF ARKW, bought 31,429 shares of Taiwan Semiconductor Manufacturing Company Ltd. TSM on Monday. At Monday’s closing price of $138.26 for TSMC’s ADR listed on the NYSE, the purchase is valued at $4.35 million.
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ARKW holds 86,368 TSMC shares valued at $11.94 million, and the stock has a 0.68% weighting in the exchange-traded fund.
Why It’s Important: Taiwanese foundry TSMC designs chips used in diverse applications, making it an all-weather company resilient against downturns in specific sectors. It supplies to industry giants like Apple and Nvidia.
Following TSMC’s fourth-quarter results released in early January, Needham analyst Charles Shi said he believes there’s more room for growth for the company. The analyst anticipates significant improvements in 2025 despite the below-trend fab utilization projected for 2024, thanks to continued revenue growth and capex recovery.
In premarket trading on Tuesday, the stock slipped 0.41% to $137.69, according to Benzinga Pro data.
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