This text is for personal, non-commercial use only. To order copies for distribution, please visit http://www. djreprints. com. Barons. com/articles/ark-invest-cathie-wood-speaks-her-mind-tesla-nvidia-ai-meta-438bf0b7 Cathie Wood, CEO and founder of ARK Investment Management, is renowned for her unwavering belief in disruptive innovation and the companies driving it. While the firm's ARK funds gained traction in 2020 with the decline in interest rates and the rise of growth stocks, they faced setbacks in the following years due to stumbling companies and rising rates. However, this year, ARK is once again experiencing success, with significant gains in stocks like Tesla (TSLA), Coinbase Global (COIN), and Roku (ROKU). The flagship ARK Innovation exchange-traded fund (ARKK) has gained 54. 5% through July 26, outperforming the S&P 500 index's 19% increase. ARK's other funds, which focus on themes such as the genomic revolution, autonomous tech and robotics, and financial-technology innovation, are also outpacing the broader stock market, although they have not yet reached their early-2021 peaks. In a mid-July interview with Barons, Wood discusses future innovations, including her bold predictions for Tesla's robotaxi fleet, her optimistic outlook on cryptocurrencies, and the beneficiaries of generative AI. Below is an edited version of the conversation. Barons: Last fall and winter, you were purchasing Tesla stock during the sell-off, but now that it has rebounded, you have been selling. What is the rationale behind these recent sales? Cathie Wood: The primary reason for these trades is portfolio management. Tesla's value has more than doubled in the past six months, while some of our other stocks are still trading near their lows. Once Tesla exceeds 10% of the portfolio, we reduce our exposure and allocate the funds to other stocks that we believe are undervalued. However, we maintain a price target of $2, 000 for the stock, which is currently trading at $264. Barons: You have bold projections for Tesla's electric-vehicle sales and robotaxi business. Can you explain the rationale behind these predictions? Cathie Wood: Our confidence in these projections has increased as Tesla continues to lower its prices. Unlike other manufacturers, Tesla can afford to do so because it is driving down the cost of consumer electronic batteries. This puts traditional manufacturers, who have higher costs, at a disadvantage. Last year, seven million electric vehicles were sold globally. By 2027, we expect this number to reach 60 million, and Tesla will maintain its current market share. Additionally, we project Tesla's robotaxi business to generate $227 billion in Ebitda by 2027, surpassing Apple's current Ebitda. We believe Tesla's advantage lies in its extensive real-world driving data, which is used to train models and adapt to uncommon situations. This data advantage is unmatched by any other company, making Tesla the prime candidate to become the leading autonomous taxi platform in the U. S. Barons: Do you think people will trust riding in robotaxis within the next few years? Cathie Wood: Personally, I trust a driverless car more than a car driven by someone I know nothing about. Human error accounts for 80% to 85% of the 45, 000 fatalities resulting from auto accidents each year. Removing humans from the equation will substantially reduce the number of accidents. We already have data to support this claim, as a fully self-driving Tesla has an accident every 3. 2 million miles, compared to one every 600, 000 miles for a Tesla driven by a human, and one every 500, 000 miles for an average car. Barons: You recently sold your stake in Nvidia due to its high valuation. What attracted you to Meta Platforms (formerly Facebook)? Cathie Wood: We bought Meta Platforms as the company shifted its focus from the metaverse to artificial intelligence (AI). The stock's turnaround was driven by this strategy change and better-than-expected user engagement. Meta exhibits a segmentation strategy with Facebook catering to older users while younger users are active on Instagram and WhatsApp. It remains to be seen how Threads will perform, but we believe it will differentiate itself from Twitter.

Barons: You are bullish on cryptocurrencies, particularly Coinbase Global. Can you explain your outlook on this sector? Cathie Wood: In the past six months, significant changes have occurred regarding crypto regulation. Previously, our focus was primarily on regulatory efforts by the executive branch, specifically the Securities and Exchange Commission (SEC). However, the judicial and legislative branches are now also involved and questioning the SEC's authority. Odds makers anticipate the SEC will lose its cases against Grayscale Investment and Ripple Labs. These developments, along with increased awareness in the legislative branch about crypto as a new asset class, have boosted our confidence in Coinbase's potential to emerge as a winner. Many Coinbase competitors have either refrained from entering the U. S. market or have exited due to regulatory concerns. Coinbase has chosen to stay and fight, and we believe they will be rewarded accordingly. Barons: What do you see as the potential benefits of generative AI, and which companies are poised to capitalize on this opportunity? Cathie Wood: When evaluating stocks with regard to AI, we focus on three key factors. The first is domain expertise and visionary management. The second is strong distribution capabilities. Finally, and most importantly, proprietary data that can be utilized to train AI models and enhance products, reduce costs, and increase productivity. Currently, knowledge workers worldwide receive $32 trillion in compensation. If our predictions are correct, this is the pivotal moment for knowledge workers, similar to the assembly line's impact on manufacturing. Costs will decrease substantially, and productivity will skyrocket. Companies not considering this shift will face competitive challenges, as certain markets will become winner-takes-all. We have high expectations for Twilio, given its access to trillions of interactions between businesses and consumers. Additionally, we believe Teladoc has the potential to become a dominant player in healthcare information in the U. S. The company's access to electronic health records and the resulting data accumulation position it for future advancements, such as recommending the best treatment options. Barons: What other disruptive technologies do you anticipate emerging in the near future? Cathie Wood: We anticipate significant advancements in curing rare diseases due to gene sequencing and Crispr gene editing technologies. With the rise of autonomous taxi platforms, transportation costs will decrease, leading to increased traffic congestion. This, in turn, will create a greater need for aerial transportation for commerce. Drone delivery of food, groceries, and medical supplies will become more prevalent. EVTOLs (electric vertical takeoff and landing vehicles) and drones will populate the skies, allowing individuals to take air taxis from Manhattan to JFK at a similar price to current taxi fares. Barons: Have you ever changed your opinion about a stock you once had conviction in? Cathie Wood: Yes, we previously held a long position in Illumina but consolidated out of it in late 2020. We believed the company made a strategic mistake by maintaining a sequencing price of $1, 000 per sequence. In the world of innovation, it is crucial to pass cost declines on to clients, fostering greater adoption and further cost reductions. This decision provided an opportunity for Pacific Biosciences of California (PacBio) to catch up. Subsequently, we sold our Illumina holdings and maximized our investment in PacBio. Please note that this is a rewritten version of the text with almost no loss of volume.