Cathie Wood has been busy this week. The co-founder, CEO and top stock picker of Ark Invest added five of her existing growth stocks on Wednesday. I covered two of those names yesterday. Let’s take a look at the other three purchases.
What is she buying now? Some of the names on her shopping list for Wednesday were: Advanced micro devices (NASDAQ: AMD), Pinterest (NYSE: PINNEN)And Intellia Therapeutica (NASDAQ: NTLA)Let’s take a closer look at her latest acquisitions.
1. Advanced micro devices
Unlike most players in the rising demand for AI chips, AMD is trading slightly lower in 2024. The stock has lost a quarter of its value since its February peak, even after reporting better-than-expected results this week.
It’s true that overall growth has slowed for AMD, after the company posted three straight years of revenue growth of at least 44% through 2022. Revenue fell 4% last year, with an even bigger 35% drop in profit.
Revenue growth has turned positive since the second half of last year, but year-on-year increases over the last four quarters have not exceeded 10%. That does not mean AMD has a problem.
It’s easy to see why AMD’s 9% revenue growth might not seem impressive at first glance, but that’s an understatement. The data center segment saw its revenue more than double to $2.8 billion, fueled by a surge in AMD Instinct GPU shipments. The segment now accounts for nearly half of AMD’s revenue.
Of course, 115% year-over-year revenue growth for what is now the company’s largest business means there is pain elsewhere, with overall growth of just 9%. AMD’s client, gaming and embedded segments suffered year-over-year declines of 49%, 59% and 41% respectively across the top lines.
The quarter continued to cement AMD’s status as an AI player, especially as it raised its full-year forecast for AI chip revenue from $4 billion to $4.5 billion. The 9% revenue increase, along with earnings per share that jumped eightfold, both beat analysts’ expectations. Wood was a buyer on Wednesday as the stock rose 4% on the well-received financial update.
2.Pinterest
In contrast to the market’s bullish reaction to AMD’s strong quarter this week, Pinterest became a Goldilocks house overtaken by bears. Shares of the company behind the visual-discovery engine fell 14% on Wednesday after reporting second-quarter results.
Looking back, the numbers were great. Revenue rose 21% to $854 million, and adjusted earnings per share climbed 38% to $0.29 per share, beating analyst estimates on both sides of the income statement. The period ended with a record 522 million active accounts, up 12%. Monetization is also going well, with average revenue per user up 8% year-over-year.
The problem here is the windshield, not the rearview mirror. Pinterest is targeting $885 million to $900 million in revenue for the current quarter, up 16% to 18% from what it brought in the third quarter of last year. That’s short of the $909 million that Wall Street pros were chasing.
It’s like a bad dessert after a hearty main course, but bulls shouldn’t be discouraged — especially considering the lower bill at the end of the meal after Wednesday’s sale. Pinterest’s guidance three months ago called for a 15% increase in revenue for the second quarter, but it actually delivered a 21% increase. If history repeats itself, Wood’s move to get in on the sale could be worth pinning to her Pinterest board.
3. Intellia Therapeutica
Find someone who loves you as much as Wood loves gene editing stocks. Shares of Intellia Therapeutics are trading lower in 2024, down a staggering 38% in the past year.
Intellia still shows promise as a developer of CRISPR-based therapies to address inborn genetic disorders, with several of its candidates in or entering late-stage clinical trials to become broadly available in the U.S. market. Earlier this week, it received approval to begin a Phase 1/2 trial in the U.K. for its potential treatment for a rare genetic lung disorder.
Intellia’s CFO left last month, but that’s not necessarily a red flag. One notable event this summer was the publication of results from a proof-of-concept study showing that it’s possible to safely redose the company’s lead gene-editing candidate. More importantly, the second dose appears to provide more complete relief than before. In short, the financial upside for a treatment just got bigger for Intellia, even as the stock trades lower this year.
The opportunity seems to be presenting itself. Wood has no problem opening the door if it is at a reduced price.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intellia Therapeutics and Pinterest. The Motley Fool has a disclosure policy.
Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool
