Growth investor Cathie Wood has delivered a steady performance this year, and her firm, Ark Invest, is gradually emerging from its downturn. While it hasn’t replicated the glory of 2020 when several of its ETFs doubled in value, it has shown the potential to outperform the market by 2025. Wood’s investment moves have always been transparent, with Ark Invest disclosing trading details at the end of each trading day. This past Monday, she decisively increased her holdings in Alibaba (BABA), Intellia Therapeutics (NTLA), and Baidu (BIDU), further expanding her existing positions in these companies. Faced with one high-risk biotech company and two enterprises that once led the Chinese internet wave, should investors follow her lead? Let’s take a closer look at these three trades.
If you believe the U.S.-China trade war will continue to weigh on Chinese stocks, Alibaba’s market performance this year might change your mind. Its stock price has achieved a remarkable 112% surge, as investors are once again embracing this e-commerce pioneer. Although revenue growth has slowed to single digits in recent quarters, market sentiment has clearly shifted towards optimism. As the second-largest U.S.-listed Chinese stock by market capitalization, one of the core drivers behind Alibaba’s stock doubling is its previously undervalued valuation at the start of the year. Even after the significant rally, its price-to-earnings ratio remains at a reasonable level of 21 times.
More importantly, Alibaba’s profitability structure underpins its resilience. While its flagship businesses, Tmall and Taobao, contribute less than half of the consolidated revenue, they account for 113% of adjusted EBITDA. This means that the core domestic e-commerce business is not only highly profitable itself but also supports strategic investments in emerging sectors like cloud services and AI chips. While market concerns about the trade war’s impact on its cross-border operations persist, the “cash cow” role of its domestic e-commerce business has instead highlighted its resilience. Two Wall Street firms recently raised their target prices to $230 and $245, reflecting optimism about the growth potential demonstrated by its AI cloud business during investor meetings.
Ark Invest also increased its stake in the biotech company Intellia Therapeutics. This firm, focused on CRISPR gene-editing technology, represents Wood’s consistent preference for cutting-edge technology sectors. Although biotech stocks inherently carry high risks, its disruptive technology platform offers long-term growth potential, aligning with Ark Invest’s stock-picking philosophy of “disruptive innovation.”
Baidu, an early leader in China’s internet industry, also appeared on the list of increased holdings. As artificial intelligence technology becomes its new growth engine, Baidu is gradually overcoming the growth bottlenecks of its traditional businesses. Its AI deployments in search, autonomous driving, and cloud services have attracted market attention. Wood’s decision to increase her stake may signal recognition of the results of this transformation.
