Asset managers and investors, including Cathie Wood, CEO of ARK Invest, are bullish on artificial intelligence.
Wood, the CEO and chief investment officer of ARK Invest, has significant exposure through multiple portfolios to both public and privately-held AI companies.
At the Alts NY Conference on Thursday, Wood called artificial intelligence “the biggest catalyst for growth” in the markets today.
Wood’s comments during a Q&A came on the heels of two days of discussion at the conference that kept returning to investors’ interest in potential opportunities in artificial intelligence as well as the ways AI will disrupt how investors do their work.
During different discussions at the conference, Paula Volent, CIO of Rockefeller University, said that she’s thinking about ways to add exposure to the technology to her portfolio. Franklin Templeton CEO Jenny Johnson said she wants to use AI in the firm’s technology stack.
Maurice Gordon, senior investment manager at Guardian Life Insurance, is leading a project to assess how to best deploy AI within its operations, whether that’s to generate annual reviews or help digest the mountain of information allocators constantly receive.
ARK Invest’s portfolios reflect this growing interest.
The firm launched a public-private crossover venture fund in 2022. The new venture fund’s largest holding as of March 31 was Anthropic, an AI startup that built Claud, a chatbot similar to ChatGPT. The founder of Anthropic previously worked for OpenAI, the company that developed ChatGPT. The second-largest holding is Replit, a browser-based coding platform that uses AI to code.
Wood’s ARK Innovation ETF, ARK Autonomous Technology and Robotics ETF, and ARK Next Generation ETF, meanwhile, held UiPath, an AI-powered business automation company among their top holdings as of March 31.
According to Wood, AI has the potential to help companies that have grown too reliant on revenue growth, rather than profits. These companies are “beginning to have a rude awakening. If their pricing is going to have to come down, then their margin structures will be under assault.”
Wood, likening AI to the assembly line, posits that companies could use AI as a substitute for some workers, particularly those in expensive white-collar jobs.
“The price we pay for knowledge workers is about $32 trillion a year, we think that could come down by a third,” she said. “It’ll primarily be automating jobs that are extremely boring and will actually elevate people into jobs that are much higher value-add and therefore higher income producing.”
In addition to helping companies pressured by revenue growth expectations, Wood also believes that artificial intelligence — and technological innovation writ large — has the possibility to bring down inflation. She believes this will happen soon, predicting that CPI will be negative in 2024.
“Innovation is set up for deflation,” she said. “It’s inherently deflationary.”
