The generally rising market over the past few weeks have awakened the spirits of growth investors, and that's naturally also a wake-up call for Cathie Wood. The CEO, co-founder, and ace stock picker at Ark Invest was particularly busy on Tuesday, adding to 10 of her existing positions across her family of aggressive growth exchange-traded funds.
I want to take a closer look at three of those expanded positions. Ark Invest bought some more Taiwan Semiconductor Manufacturing (TSM -0.17%), Airbnb (ABNB -0.94%), and Advanced Micro Devices (AMD -0.20%) on Tuesday. Let's check out what Wood is buying this week.
Taiwan Semiconductor Manufacturing
Tech investors know that Taiwan Semiconductor Manufacturing is the world's largest foundry, commanding two-thirds of the global pure-play foundry market. It may not be a household name outside of tech circles, but it's still the eighth most valuable company by market cap among U.S. exchange-listed stocks.
Business has been booming for TSMC. It came through with another beat in its latest quarter that it posted in April. Revenue rose 42% through the first three months of this year, or a 35% step-up in U.S. dollars. The bottom line was even better. Net income soared 60% in the first quarter. Earnings have outpaced analyst projections consistently over the past year. TSMC's net margin was a strong 43% for the quarter, debunking the myth that this a low-margin cyclical commodity play.
Image source: Getty Images.
Wood wasn't the only one feeling more bullish about TSMC on Tuesday. Susquehanna lifted its price target on the shares from $250 to $255, implying nearly 20% of near-term upside to the shares. The quantitative analyst firm notes that channel checks show that while shipments have been weak for the smartphone market, the boom in artificial intelligence (AI)-related wafer shipments is more than bailing out the weakness elsewhere. Foreign exchange swings may eat into the top-line upside on the way down to the bottom line, but the outlook remains positive for the leader with at least a few more years of market dominance in its leading-edge niche.
Yes, the $5 bump in the price target is just a 2% increase. It's a modest revision for a stock that has now soared almost 60% since bottoming out in April. However, it is a notable reversal for Susquehanna after lowering its price target on TSMC from $265 to $250 back in April.
Airbnb
Unlike the other two stocks in this piece, which are experiencing a resurgence on the strength of the AI revolution, Airbnb is traveling in the opposite direction. The leading platform for booking vacation properties is seeing its revenue growth decelerate sharply for the fourth year in a row. It's still positive, but analysts are now holding out for single-digit growth in 2025.
The fallout of the trade war and geopolitical hiccups is making it dicey to book dreamy international getaways, and this is before we start to consider the impact that all of this will have on the economy and our ability to afford bucket list vacation itineraries. Revenue rose a mere 6% for Airbnb in the first quarter of this year, and reported net income declined. Airbnb is still making money. Its has generated $4.4 billion in free cash flow over the past four quarters.
CEO Brian Chesky sold a small number of shares late last month, but Wood isn't following suit. Ark Invest is increasing its position in Airbnb.
Advanced Micro Devices
AMD has been a laggard among tech companies with serious skin in the AI revolution, but the bulls are starting to make up for lost time. The shares are up 66% since their April low. The stock is still down nearly 20% over the past year.
Business is picking up, largely on the strength of demand for data center solutions. Revenue rose 36% in AMD's latest quarter, accelerating for the fourth quarter in a row. The trade war and the resulting export restrictions into China are holding back results, but the numbers are still strong. AMD came through with a 55% surge in earnings per share in last month's report.
AMD's data center business experienced a 57% year-over-year boost in revenue, but could be starting to make some moves elsewhere. AMD collected some bullish analyst comments following an AI event last week. On Tuesday of this week it turned heads when Microsoft announced that it would be working with AMD to co-engineer silicon solutions. This will include the next generation of Xbox consoles. It could finally be "game on" for AMD shareholders.
