Cathie Wood recently said robotaxis are "one of the most important investment opportunities of our lifetimes." Her asset management company, Ark Invest, is leaning into that opportunity with sizable positions in Nvidia (NVDA -2.08%) and Tesla (TSLA 3.27%).

The chipmaker accounts for $87 million of its $12.2 billion portfolio, while the electric carmaker accounts for $993 million. In other words, Ark has allocated about 0.7% of its assets to Nvidia and more than 8% to Tesla.

Here's what investors should know about these artificial intelligence growth stocks.

1. Nvidia

Nvidia graphics processing units (GPUs) are the gold standard in accelerated computing. Their ability to process large amounts of data in parallel makes them ideal for data-center workloads like artificial intelligence (AI), where increasingly sophisticated models require chips capable of considering hundreds of billions or even trillions of parameters very quickly.

Indeed, Forrester Research says Nvidia GPUs are "synonymous with AI infrastructure," and analysts estimate its AI computing market share at 80% to 95%, according to Reuters. But what makes Nvidia truly formidable is its ability to pair hardware with subscription software and cloud services. For instance, the Nvidia Drive platform brings together the hardware and software needed to build self-driving cars.

Specifically, the Drive platform includes data center GPUs needed to train AI models and in-car supercomputing systems-on-a-chip needed to run inference on those models. It also includes software development kits that accelerate the creation of autonomous driving applications and simulation software needed to test the decision-making capabilities of the underlying AI models. Collectively, those products already represent a $14 billion pipeline in automotive revenue that will be recognized over the next six years, and Nvidia has partnerships with several key players in the mobility space, including General Motors-backed Cruise, Amazon-backed Zoox, Mercedes, and Volvo

However, the automotive segment is currently the smallest of Nvidia's four primary revenue streams -- the largest being data center, followed by gaming and professional visualization -- but that could change in the years ahead. Management values its addressable market at $1 trillion, and automotive hardware and software account for $300 billion of that total.

Here's the upshot: Nvidia is a wonderful company, but the stock currently trades at 100 times earnings, indicating that Wall Street has great expectations. Any future bumps in growth could translate into substantial share-price volatility. As a shareholder myself, I would wait for a cheaper valuation before adding to my position, but investors who buy Nvidia stock today should be aware of the risks.

2. Tesla

Tesla's market share in battery electric vehicles (BEVs) increased 280 basis points to 21.8% during the first half of 2023, putting it more than six percentage points ahead of the next carmaker. But what truly separates the company is profitability. Tesla reported the highest operating margin among volume carmakers last year, an accomplishment that CEO Elon Musk attributes to more advanced manufacturing technology, but the company is poised to become even more profitable in the future.

Cathie Wood says Tesla has more autonomous-driving data than all other carmakers combined, echoing something Musk has said on several occasions. That gives the company an edge in developing full self-driving software (FSD) because data is the cornerstone of AI. Tesla plans to monetize its FSD technology by (1) selling software directly to consumers, (2) licensing software to other automakers, and (3) providing autonomous ride-hailing services with robotaxis powered by its FSD platform.

Tesla already sells FSD subscriptions to drivers, but the second and third opportunities are purely theoretical at the present time. That said, Tesla is discussing a software licensing agreement with at least one major manufacturer, and it plans to mass produce a robotaxi next year, implying that autonomous ride-hailing services are on the horizon.

FSD technology has staggering implications for revenue growth. Autonomous vehicle sales are forecasted to increase by 35% annually to reach $2.4 trillion by 2032, and Wood says robotaxi services could generate $9 trillion in annual revenue by 2030. However, FSD technology could have an even more profound impact on profitability. As Tesla evolves into a software and services company, Musk says its gross profit margin could reach 70%, up from 18.2% in the most recent quarter.

Here's the upshot: Shares of Tesla trade at 69 times earnings, an exorbitant multiple compared to other automakers. That valuation may look cheap in a few years if the company successfully pivots to software and services, but the stock is undoubtedly risky. Tesla's growth prospects are heavily predicated upon its ability to bring truly autonomous FSD technology to market.

Personally, I believe in the bull case, and I think risk-tolerant investors can comfortably buy a small position in Tesla stock today. But similar to Nvidia, investors should be aware of these risks.