Today’s Headline

Cathie Wood Just Cut Her Position in an AI Stock That's Climbed 1,000% and Piled Into Shares of 2 Other AI Giants

Something caught my eye this week that I believe every investor should take a moment to reflect on. Cathie Wood, the high-profile CEO of ARK Invest, made a bold move again. She cut her position in Palantir Technologies, one of the hottest AI stocks of the last few years, and instead, bought more shares of Nvidia and AMD. This might seem strange at first, but after digging deeper, I believe there are some valuable lessons in this for us.

Let me walk you through what happened, why it matters, and what you should be thinking about if you're serious about riding the AI investment wave.

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Why Did Cathie Wood Sell Palantir?

Palantir (PLTR) is no small player in the AI game. It's a company known for building software systems powered by artificial intelligence that help governments and big organizations make sense of massive amounts of data. Over the past three years, its stock has exploded by 1,000%. That kind of growth is enough to turn heads.

But here's the thing: when a stock jumps that much, it becomes expensive. Really expensive. As of now, Palantir trades at around 200 times forward earnings. To put it simply, investors are paying a very high price for each dollar the company is expected to earn in the future.

Cathie Wood didn't sell all of her Palantir shares. In fact, Palantir is still one of the top holdings in her ARK Innovation ETF. But she trimmed the position to lock in some profits and possibly to reduce exposure to what could be an overvalued stock in the short term.

It’s not that she doesn’t believe in Palantir anymore. It’s more about managing risk and being smart with where her money is working hardest.

So Why Nvidia and AMD?

This is where it gets interesting. While trimming Palantir, Wood doubled down on two major AI hardware companies: Nvidia (NVDA) and Advanced Micro Devices (AMD).

Both companies make the powerful chips that AI software like Palantir depends on. Without chips from Nvidia and AMD, AI programs can’t run efficiently. It’s like trying to run the latest video game on a computer from 1998 — it just won’t work.

So Wood’s move makes sense. She’s shifting some investment from AI software into the nuts and bolts that power the entire AI revolution — the semiconductors.

Let’s Break It Down Further:

1. Nvidia – This company has become the king of AI chips. Their graphics processing units (GPUs) are used in everything from data centers to autonomous vehicles. Nvidia's revenue has hit record highs lately, and their future product pipeline looks strong. At 26 times forward earnings, the stock has become more affordable compared to earlier this year when it was at 50 times.

2. AMD – While not as dominant as Nvidia in the AI space, AMD is making big strides. They’re expanding into data centers and AI-focused processors, and their overall business is solid. Revenue and profits are growing, and CEO Lisa Su recently said 2025 is off to an "outstanding" start. AMD’s stock is also trading at more attractive levels than a few months ago.

So, in simple terms, Wood sold part of an expensive AI stock and bought into two essential AI infrastructure companies at a relative discount.

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What This Means for Everyday Investors

When I see big-name investors like Cathie Wood making moves like this, I pay close attention. It doesn’t mean we should copy them blindly. But we should try to understand their thinking.

Here are some important takeaways for us:

• Take profits when it's smart. If a stock runs up 1,000%, like Palantir, it's okay to take some money off the table. You’re not giving up on the company. You’re just being disciplined.

• Think long-term, but also be tactical. Wood is a long-term investor. But that doesn’t stop her from rotating capital into better opportunities when they arise.

• Understand the full ecosystem. AI isn't just about software. It's about hardware, data, chips, cloud infrastructure, and more. Sometimes, the real money is in the less glamorous parts of the supply chain.

• Valuation matters. Even the best companies can be overpriced. Buying great companies at a great price is what separates good investors from great ones.

Is This a Buy Signal for Nvidia and AMD?

I personally believe both Nvidia and AMD still have room to grow — especially if AI adoption keeps accelerating, which it likely will. The world is only starting to see how powerful and disruptive AI can be.

Nvidia is ahead of the game with its CUDA platform, which makes it easier for developers to use their chips. That kind of edge isn’t easy to replicate. AMD, on the other hand, is gaining momentum and could be a strong #2 player in a rapidly growing market.

These companies are also beneficiaries of the rising demand for data centers, cloud computing, and AI applications in healthcare, finance, and autonomous vehicles.

What About Palantir?

Don’t count it out. While Wood trimmed her position, she still holds a lot of Palantir shares. That tells me she believes in the long-term potential. It’s just that at its current price, the upside may not be as exciting in the short term.

Palantir is winning government contracts, expanding its customer base, and innovating its platforms. The fundamentals look solid. But from a valuation perspective, it may be time to be cautious or wait for a better entry point.

What I'm Doing Personally

I’m watching all three stocks closely. If Nvidia or AMD dip further, I might add to my positions. I also hold a small amount of Palantir and may trim if it keeps climbing too fast without a meaningful increase in earnings.

But more importantly, I’m using this moment as a reminder to:

• Review my portfolio regularly.

• Take profits when it makes sense.

• Look for underappreciated areas of big trends.

• Think about the full tech ecosystem, not just the flashy names.

Final Takeaways

The AI boom is still in its early stages. There will be winners and losers along the way. The key is to stay informed, be patient, and invest with your eyes wide open.

Cathie Wood just reminded us of a powerful lesson: even the best stocks aren’t always the best buys — it depends on the timing, the price, and the opportunity cost.

Keep your portfolio balanced. Don’t chase hype. And always look for where the puck is going — not where it’s been.

Until next time, keep learning, stay curious, and let your money work smart for you.

[Live Life Grow Wealth]

DISCLAIMER

I make no representations, warranties, or guarantees, whether expressed or implied, that the content provided is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.

I am an individual content creator and not regulated or licensed by the Monetary Authority of Singapore (MAS) as I do not provide investment services.

All forms of investments carry risks, including the risk of losing your entire invested amount. Such activities may not be suitable for everyone. You are strongly encouraged to seek advice from a professional financial advisor if you have any doubts or concerns.