Cathie Wood on Tesla’s Embodied AI and the Market’s Overlooked Gems

In a recent interview, Cathie Wood, founder of ARK Invest, shared her insights into the transformative potential of artificial intelligence (AI) across various sectors such as biotechnology, autonomous driving, and robotics. She emphasized the evolving role of AI from cloud-based applications to ’embodied intelligence’ that interacts with the real world.

AI in Biotechnology: An Underestimated Revolution

Wood points out that the potential of AI in biotech is being severely underestimated by the market. The integration of AI technology can significantly enhance inefficiencies, tackle fragmented data issues, and streamline drug development, disease detection, and personalized medicine. According to Wood, AI will soon revolutionize the entire medical R&D process, beyond mere image or genomic analysis.

NVIDIA and Palantir: Misunderstood Giants

Reflecting on ARK’s investment history, Wood recalled their early 2014 investment in NVIDIA, driven by its potential in autonomous vehicles. Initially overshadowed by its reputation as a gaming graphics company, NVIDIA’s stock skyrocketed with the rise of generative AI technologies like ChatGPT. ARK strategically capitalized on these fluctuations to reinvest in undervalued opportunities.

Wood has also diversified into other AI beneficiaries like Palantir, a pioneer of enterprise AI solutions. Palantir’s ‘Platform as a Service’ (PaaS) model enables industries to incorporate AI into their operations effectively. Companies like NVIDIA and Palantir, often misunderstood by the market, are seen by Wood as foundational pillars for the future AI ecosystem.

Embodied AI: The Next Frontier Led by Tesla

Wood introduces ’embodied AI’ as the next groundbreaking trend in AI, whereby AI systems will engage with the physical world, performing tasks through human-like robots and autonomous systems. Tesla, she notes, is spearheading this movement not only with its autonomous driving endeavors but also through its long-term vision of humanoid robotics, indicating vast untapped market potential.

• According to ARK’s research, the market for robotaxi services alone could generate annual revenues of $8 to $10 trillion within the next decade, with platforms like Tesla likely capturing a significant share.

• The humanoid robot market is poised to grow even more, reaching a potential $26 trillion market size within 15 years.

These innovations reflect a new era where AI and human collaboration are starting to take form, transitioning AI from the virtual space to everyday life.

Navigating AI Economics and Investment Strategy

Wood shared insights from ARK’s long-term research, illustrating how the cost of transportation could drastically decrease from $1.25 per mile during the horse-carriage era to just $0.16 with AI-driven electric vehicles, propelled by technological learning curves.

Despite occasional skepticism over ARK’s dynamic trading strategies, Wood explains that exploiting market volatility is key to optimizing portfolios. With algorithm-driven trades dominating the market, ARK adjusts its holdings to capitalize on fluctuations, maintaining a flexible yet stable long-term outlook. She also challenges the notion of big tech monopolizing AI, highlighting opportunities for smaller, innovative firms to thrive as seen with companies lagging behind like Apple in AI.