Cathie Wood is rolling again. Growth stocks are back in favor, and that's good news for the founder, CEO, and primary investment manager of the Ark Invest family of exchange-traded funds (ETFs).
Wood was a busy shopper on Tuesday. She added to existing stakes in Amazon (AMZN 0.89%), Advanced Micro Devices (AMD 2.33%), and eToro (ETOR +0.33%). Let's take a closer look at Wood's latest purchases.
NASDAQ: AMZN
Key Data Points
1. Amazon
Is it time to stop calling Amazon simply the country's leading online retailer? Its Amazon Web Services cloud platform generated just 17% of its sales last year, but delivered 58% of the operating profit. AWS saw its slice of the operating income pie grow to 62% in the first quarter of this year, even as its segment sales contracted to just 15% of the top line.
With AWS growing faster than its e-commerce business -- and gaining market share -- it may be time to redefine how investors view Amazon. A repositioning campaign can't hurt. This isn't the worst performing "Magnificent Seven" component, but Amazon stock is trading lower year to date.
Image source: Getty Images.
Growth isn't what it used to be at Amazon. This is shaping up to be the third straight year that sales growth clocks in below 12%. Amazon's top line rose just 9% to $155.7 billion in the first quarter that it announced last month. Its guidance calls for more of the same this time around, eyeing 7% to 11% in net sales growth for the quarter ending later this month. The good news here is that it was only targeting a 5% to 8% increase for the first quarter, and it blew past the ceiling of that range.
There are economic and tariff uncertainties weighing on Amazon despite AWS leading the growth baton. Its outlook is bracing investors for a sequential step back in operating margin. The stock may not seem cheap at 33 times this year's projected earnings, compounded by analysts lowering their profit targets in recent months. It's still hard to bet against Amazon, no matter how you define its business these days.
NASDAQ: AMD
Key Data Points
2. Advanced Micro Devices
Another company trading lower this year that deserves better is AMD. The artificial intelligence (AI) revolution has reinvigorated demand for its chips, even if you couldn't tell from the stock chart. Shares of AMD have fallen 28% over the past year, even as revenue growth has accelerated in the last four quarterly updates.
AMD posted strong quarterly results in May. The 36% year-over-year jump in revenue is its heartiest top-line growth in nearly three years. The bottom line held up even better, clocking in with a 55% surge. It may not seem like a bargain at 29 times this year's projected earnings. Analysts also see revenue growth decelerating at this point. It's still a compelling way to play the data center buildout and rising demand for AI chips.
NASDAQ: ETOR
Key Data Points
3. eToro
Wood doesn't shy away from investments with a new-stock smell. Israeli-based eToro went public just three weeks ago, but it's already on her scorecard. She initiated a position on its May 14 IPO, and kicked off this week by adding to that stake in back-to-back trading days. The social investing platform is currently serving 3.5 million funded accounts across 75 different countries. It has $16.6 billion in assets under administration across various investing classes.
Growth is on a tear at eToro. Revenue more than doubled for three consecutive years before slowing to a still impressive 41% jump in 2024. Some fast-growing platforms aren't profitable as they build out their fledgling businesses, but eToro turned that corner last year. The shares are currently trading comfortably above eToro's IPO price of $52. The real test comes now with eToro on the hook to deliver on a quarterly basis as a publicly traded company.
