Out with the old. With the new Some investors might think that’s Cathy Wood’s strategy these days. And they would have a point.
Wood’s arch-invest exchange-traded funds (ETFs) are trimming their positions in several stocks that Wood once championed. Specifically, she is selling two artificial intelligence (AI) stocks. Do you sell them too?
1. Twilio
You might be surprised to see. Twilio (NYSE: TWLO ) As one of the AI stocks that Wood is selling. After all, it was only a few months ago that he named Twilio as one of his top AI picks to buy. An ArchInvest report in August 2023 declared that Twilio was part of the “sleeper wave of AI” and should “significantly benefit from AI opportunities.”
So far this year, though, Wood has steadily sold shares of Twilio. Its flagship Arc Innovation ETF Since the end of January 2024, AI has completed more than 20 sale transactions of the stock. Arc Next Generation Internet ETF Not far behind, Twilio is selling for about 20 times. Arc Fintech Innovation ETF Has sold Twilio shares at least 10 times this year.
To be sure, Wood hasn’t completely thrown in the towel on Twilio. The Ark Fintech Innovation ETF still has more than 3% of its portfolio invested in the communications platform provider. A little more than 1% of the Arc Innovation ETF’s portfolio is invested in Twilio. Arc Next Generation Internet ETF holds a little over 1% of its portfolio in stocks. However, Wood is not as enamored with Twilio as she once was.
2. UiPath
UiPath (NYSE: PATH ) Another favorite of Wood’s last year was AI stocks. Like Twilio, UiPath was seen by ArchInvest as one of the emerging AI players that outperformed the megacap “Magnificent Seven” stocks that made huge gains in 2023. The fund manager’s August 2023 report discusses UiPath’s first pick for its “highly persuasive” AI.
That was then. Four Ark Invest ETFs have sold shares of UiPath on at least nine occasions this year: Ark Innovation ETF, Ark Next Generation Internet ETF, Arc Autonomous Technology and Robotics ETFAnd Arc Space Exploration and Internet ETF. Ark Fintech Innovation ETF and Ark Innovation ETF have sold shares of UiPath twice and four times, respectively, so far in 2024.
Again, Wood hasn’t completely abandoned UiPath. The stock still holds the second-largest position in the Arc Autonomous Technology and Robotics ETF. This is the fifth largest position for Ark Innovation ETF and Ark Fintech Innovation ETF. UiPath is also among the top 10 holdings in the Arc Next Generation Internet ETF and the Arc Space Exploration & Internet ETF.
Why is Wood Selling Twilio and UiPath?
Wood has not publicly commented on his reasons for selling the Twilio and UiPath shares. She can take some profits off the table with UiPath, though not with Twilio because it hasn’t performed well.
Twilio faces challenges with its segment business, which markets a customer data platform. The segment generates about 7% of the company’s total revenue. Twilio recently named Thomas White as segment president to hopefully turn things around.
Ark Invest may be unhappy with Twilio’s weak growth. The company reported revenue growth of just 5 percent year-over-year in the fourth quarter. It remains unprofitable, posting a loss of more than $365 million based on generally accepted accounting principles (GAAP).
UiPath on the other hand is performing well. It delivered record revenue of $405 million in Q4, up 31% year-over-year. The company also reported its first quarter of GAAP profit since its IPO in 2021.
Should You Sell Twilio and UiPath Too?
You should not base your buying and selling decisions on what a famous investor is doing. Wood’s preferences and goals may be completely different from yours.
I think both Twilio and UiPath could be big winners in the long run. My favorite of these two stocks is UiPath. As we’ve already seen, it’s growing much faster than Twilio. I like the future growth prospects for the company’s enterprise automation platform. There’s a reason Ark Invest still holds larger positions in UiPath than Twilio: It’s just the better AI stock.
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Keith Speights has no positions in any stocks. The Motley Fool has positions and recommends Twilio and UI Path. The Motley Fool has a Disclosure Policy.
Cathy Wood is selling these 2 artificial intelligence (AI) stocks. did you? Originally published by The Motley Fool.