Ark Invest's Cathie Wood remains bullish on the AI industry, predicts Tesla to reach $2000 by 2027.

The share price of the AI graphics chip giant NVIDIA has surged to over $400, bringing its market value to over $1 trillion, making it the fifth-largest company in the US by market capitalization. Cathie Wood, the renowned stock investor, had nearly liquidated her holdings in NVIDIA before its significant rise, which has become a topic of discussion. Cathie Wood explained on Twitter that Ark Invest had its eye on NVIDIA when it was at $5. At that time, many thought it was just a gaming chip stock, but Ark was the first to identify NVIDIA as an AI stock, and it has now increased by 80 times!

In 2014, most investors considered $NVDA, priced at ~$5, simply a PC gaming chip stock. In contrast, @ARKInvest’s first principles research pointed to #Nvidia as the premier equity play on #AI. Now up ~80-fold, investors seem to think NVDA is the only AI play. It is not! https://t.co/RzII3KMCGu

— Cathie Wood (@CathieDWood) May 29, 2023

Ark Invest Bought NVIDIA Stocks for Less than $20, Cathie Wood's Strategy

A dedicated netizen commented on Cathie Wood's Twitter and showed data to back their claim that Ark Invest bought NVIDIA stocks before 2016 when the price was below $20. Despite multiple buying and selling instances, they managed to secure profits exceeding 380%.

In an interview, Cathie Wood explained that the reason for selling was based on the cyclical nature of the chip industry. Ark Invest still believes in NVIDIA's performance in the AI era but finds the current price above their estimation.

Note: For startups, Ark Invest typically measures using the Price-to-Sales ratio, where NVIDIA has reached 25 times, while Tesla is currently only at 6 times.

Belief in the AI Future, Bullish on Tesla and Meta

Cathie Wood remains optimistic about AI development, estimating that by 2030, AI will increase knowledge worker productivity by over 4 times. She is bullish on Tesla and Meta.

Wood mentioned that Meta focuses on developing more powerful AI technology and highlighted their LLaMA AI language model, which can provide better models with fewer computing resources and more data. However, Meta is not part of their holdings.

Tesla has consistently been in Ark's top ten holdings list, with the three funds under Ark Invest owning $1 billion worth of Tesla stocks, representing 0.17% of Tesla's total market value.

Tesla's Stock Price Could Reach $2,000 by 2027

Ark Invest recently released a report on Tesla's stock price, expecting it to reach $2,000 by 2027, with bullish and bearish estimates at $2,500 and $1,400, respectively.

The report highlights recent advancements in artificial intelligence, from large language models like ChatGPT to image generation tools like Midjourney, which are expected to accelerate innovation in the autonomous driving industry. For example, Tesla has already used transformer models popularized by large language models to predict lanes and intersections. Ark Invest believes Tesla's vertical integration strategy and Dojo training supercomputer are key competitive advantages. The latest video of Tesla's Full Self-Driving (FSD) software update, showcasing a driver almost completing a full hail ride without touching the steering wheel, indicates Tesla's imminent rollout in certain areas.

Ark Invest points out in the report that Tesla's future Robotaxi autonomous taxi service is a key driver, contributing 44% of annual revenue and 64% of expected EBITDA by 2027. Electric vehicles account for 47% of revenue in 2027 but with significantly lower profits compared to Robotaxi.