Cathie Wood, the visionary founder of ARK Invest, argues that the real investment gold isn’t in the usual Big Tech giants but in the transformative power of AI applications and biotech innovation. While AI infrastructure stocks have surged, Wood believes the next frontier lies in companies applying AI to revolutionize healthcare, government, fintech, and media. With AI training costs plummeting and biotech breakthroughs accelerating, her contrarian take offers a roadmap for investors seeking the market’s overlooked winners before the broader crowd catches on.

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If markets seem narrowly obsessed with the same six names, it’s because they are. But that narrow focus is masking a larger, more important shift beneath the surface.

According to Cathie Wood, founder and CIO of ARK Invest $ARKG ( ▼ 1.09% ) , the biggest investment opportunities right now aren’t found in the usual suspects. While the “Magnificent Six” quintupled their market caps from 2019 to 2024, the rest of tech innovation grew only 30%. That discrepancy is not because the others are underperforming—it's because the market still doesn’t understand where true innovation is unfolding.

The collapse in AI costs is the biggest force reshaping this landscape. Training AI models is now 75% cheaper each year, and inference—the cost of actually running those models—is dropping by as much as 95% annually. These cost curves aren’t theoretical. They’re already reshaping entire industries.

Cathie Wood sees the opportunity moving away from pure infrastructure—where valuations are bloated—and toward application-layer innovators in biotech, defense, fintech, and digital media. The companies applying AI to real-world problems are scaling faster and, crucially, they’re trading at meaningful discounts.

Palantir $PLTR ( ▼ 2.58% ) isn’t just a software company—it’s a strategic asset. Built originally for military intelligence, its platforms now underpin decision-making at the highest levels of government, defense, and healthcare.

Wood sees Palantir as one of the most underappreciated winners in the AI transition. While defense budgets historically prioritized massive hardware like fighter jets or warships, the real competitive edge now lies in data and decentralized intelligence. Ukraine’s use of off-the-shelf drones like DJI proved it: smarter tech beats expensive tech.

Palantir’s footprint spans departments that still run on systems built in the 1960s—systems that AI can immediately streamline. Its deep integration with U.S. government agencies makes it one of the few companies capable of modernizing public infrastructure at scale, from disease modeling to disaster response.

Despite past pullbacks in federal tech spending, Palantir is the exception. Its addition to the S&P 500 isn’t just a milestone—it’s a recognition of how foundational its platforms have become. And while Big Tech is still chasing hype cycles, Palantir is embedded in institutions that have no choice but to evolve.

For years, biotech was burdened by long timelines, high costs, and regulatory headwinds. But those walls are coming down. And for Cathie Wood, that spells one thing: opportunity.

At the top of that list is CRISPR Therapeutics $CRSP ( ▼ 0.3% ) . With therapies already curing sickle cell disease and beta-thalassemia, CRISPR is doing what legacy pharma can’t—delivering one-time gene edits that eliminate chronic conditions at the root.

This isn’t science fiction. It’s happening now. And thanks to AI, drug discovery and development cycles are shrinking. The traditional 13-year timeline to bring a therapy to market is falling to 8 years or less, slashing both cost and risk. R&D returns, once stuck in the low single digits, could surge to 15–40% as algorithms optimize every stage of the process.

Twist Bioscience is another Wood favorite. Its synthetic DNA platform enables early disease detection through blood-based diagnostics, catching conditions like cancer before they become catastrophic. It’s not just more humane—it’s economically smarter. Twist shifts the industry from expensive “sick care” to preventive precision medicine.

While old pharma resists change, these platforms are rewriting the rules. They're lean, data-driven, and ready to scale. And right now, markets are still pricing them like the story hasn’t started.

Investors often mistake volatility for risk. But in platforms like Coinbase $COIN ( ▼ 16.7% ) and Roku $ROKU ( ▼ 15.06% ) , Wood sees misunderstood value where others see uncertainty.

Coinbase, long synonymous with crypto trading, has evolved into the core infrastructure layer for the emerging world of tokenized finance. With the U.S. now shifting toward more supportive regulation—after near-abandonment under former SEC Chair Gary Gensler—Coinbase is regaining its lead as the most scalable, compliant gateway into digital assets.

In a world where AI and blockchain intersect, Coinbase plays a unique role. It’s not just about coins—it’s about identity, data integrity, and programmable finance. Wood sees this as a critical building block for the next generation of fintech infrastructure.

Roku, meanwhile, is turning connected TVs into intelligent ad networks. While Netflix and Disney focus on content, Roku owns the rails. Its operating system powers one in three smart TVs in the U.S., giving it unmatched insight into viewer behavior. AI enables precise targeting, ad optimization, and personalized experiences—all of which make its platform increasingly valuable to advertisers looking for measurable ROI.

In both companies, the same dynamic plays out: overlooked platforms with durable infrastructure, significant moats, and massive optionality. And in both cases, the valuation doesn’t yet reflect that.

Wood’s broader thesis is simple but deeply contrarian: AI infrastructure is overvalued. AI application is not.

Data centers, semiconductors, and cloud stacks have already seen capital floods. But the companies turning that infrastructure into real-world productivity—curing disease, optimizing government, securing digital finance—remain undervalued.

Her call is not to abandon Big Tech, but to recognize that its best days might already be priced in. Meanwhile, the next wave—powered by collapsing AI costs—is only just beginning to scale. The democratization of intelligence means smaller players can now do what only the giants could, and faster.

These aren’t speculative names. They are cash-flowing, scientifically credible, operationally rigorous companies. Yet they trade at a 10% premium to the S&P, down from 275% just a few years ago.

That gap won’t last. Eventually, the market will catch up. But the edge belongs to those who see it now—before consensus arrives.

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