Fed Put 'Dagger' In Ark With Rate Hike 'Earthquake' But Shockwaves Have Ceased And Cathie Wood Expects 'Super Exponential' Growth

Zinger Key Points
  • ARKK is down approximately 38% over the last year, but Cathie Wood sees a reversal ahead.
  • "This is where the world is going," Wood says.

The Federal Reserve's inflation fight has rattled growth and tech names, but Ark Invest's Cathie Wood expects that to change.

What To Know: Ark's flagship fund, the ARK Innovation ETF ARKK, has been punished by the markets for its high-growth exposure amid the Fed's fast-paced interest rate response to historically high inflation. ARKK has fallen approximately 38% over the last year and is even further off its peak from early 2021.

"That was all related to the Fed jacking up interest rates 19-fold in less than a year: unprecedented. We think it's like an earthquake," Wood said Tuesday on CNBC's "Squawk On The Street."

Now the Ark Invest chief believes the shockwaves are more likely to be felt in cyclical names over the next six to nine months, while innovation heads for exponential growth, she said. 

Some of the names she's high on include Block Inc SQ and Tesla Inc TSLA.

Check This Out: Cathie Wood Just Bought Into This Big Tech Stock

Block is reducing the cost of financial services and developing a closed-loop ecosystem, she said, adding the company is likely to be one of the biggest winners in the digital wallet space. 

"Their clients won't even have to interact with banks. Cash App and Square will take care of that and really become the financial services company," Wood said. 

The Ark Invest founder and CEO has long made the case for Tesla, but one part people are overlooking is its artificial intelligence (AI) exposure. Microsoft and Nvidia are the obvious plays, but Tesla stands to benefit in several areas.

"It is probably one of the most important AI beneficiaries in the form of autonomous taxi platforms ultimately, which are powered by AI," she said. 

Tesla is also positioned to cut costs for electric vehicles much more rapidly than competitors, which is going to help accelerate the shift from internal combustion vehicles to electric vehicles (EVs), Wood explained. 

See Also: Why Tesla Stock Is Moving Up Today

Wood reminded investors that Ark has a five-year investment horizon and although the interest rate cycle stuck a "dagger" in the firm's strategy, she believes we are on the other side now.

When it comes to AI, EVs and blockchain technology: "This is where the world is going," Wood said. 

"We also assume that our companies will enjoy what we're calling exponential and super-exponential growth."

ARKK Price Action: Ark's flagship fund was up 4.61% at $39.99 at time of writing, according to Benzinga Pro.

Photo: RAEng_Publications from Pixabay.

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