Ark Investment Management manages eight exchange-traded funds (ETFs) that invest primarily in innovative technology stocks. Last year, Ark CEO Cathie Wood said software companies would be the next big opportunity in artificial intelligence (AI), predicting they could generate $8 in revenue for every $1 spent on chips from suppliers like Nvidia.
Ark ETFs reflect this position. You’re here stock is the flagship’s largest holding Arche Innovation ETF because Wood called its self-driving software the world’s biggest AI opportunity. Additionally, Wood recently acquired stakes in leading AI software companies such as OpenAI, Anthropic and Elon Musk’s xAI through the Ark Venture Fund.
If Wood is right about AI software, several stocks could see substantial gains in the years to come. here’s why Amazon (NASDAQ:AMZN) And Duolingo (NASDAQ:DUOL) could be among them.
1. Amazon: AI software is just the beginning
Amazon is one of the most versatile AI stocks that investors can buy. It integrates technology into many of its existing businesses, from e-commerce to streaming, and its cloud division Amazon Web Services (AWS) develops everything from AI chips to AI chatbots.
Amazon uses AI to power the recommendation engine on Amazon.com. It learns which products customers like to buy so it can promote more of them to drive sales. Additionally, the company has developed a suite of AI software tools for sellers, which help them write product descriptions and create more engaging ads to increase conversions.
But Amazon Web Services (AWS) is at the heart of Amazon’s AI ambitions. It has designed its own data center chips for training and inferencing AI models, and they have become popular with developers because they can reduce costs by up to 50% compared to other Amazon infrastructure (which are powered by Nvidia(chips are more expensive, for example).
Then there’s Amazon Bedrock, where developers can access a suite of ready-to-use large language models (LLMs) in the cloud from leading startups like Anthropic. It also offers a family of LLMs designed in-house by Amazon, called Titan. Developers can create AI applications for their business much faster using off-the-shelf LLMs than creating their own, which would require considerable amounts of time, data and money.
Finally, AWS offers finished AI applications like the new Amazon Q, a comprehensive virtual assistant that can be tailored to the needs of almost any organization. It can scan, analyze and even write computer code to accelerate product development, in addition to answering employee questions on a wide range of topics.
Amazon could soon surpass a $2 trillion valuation, a milestone only four other U.S. tech companies have reached. Here’s the bottom line: Wall Street expects Amazon to generate a record $638 billion in revenue in 2024, which is far more than any of these other four companies will bring in — Apple is the closest to the mark with estimated…
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