"Sister Mumu" said she did not participate in Arm's IPO because its valuation was too high

Ark Investment Management CEO Cathy Wood said in an interview on Wednesday that her company did not participate in Arm's blockbuster IPO because she believed the chip design company was overvalued relative to Arm's competitive position. Last Thursday, Arm, a chip design company owned by SoftBank Group, was valued at US$55 billion on the Nasdaq, becoming the largest IPO this year. The company's shares jumped 25% on its first day of trading, and its IPO was reportedly 10 times oversubscribed in the days leading up to the listing.

Wood said the recent enthusiasm for artificial intelligence companies makes sense, "given the huge opportunities we see in the future, innovation is undervalued, and artificial intelligence is largely catalytic."

But she believes investors may have overestimated Arm’s position in the field of artificial intelligence.

"I think in the case of Arm, there's probably a little too much emphasis on AI and maybe not enough focus on competitive dynamics," she explained. "So we didn't participate in that IPO, and we also compared it to the stocks in our portfolio. We think Arm is overvalued from a valuation perspective, and we see much lower-priced companies in our portfolio that have much greater exposure to AI."

Wood may have a point. Arm's stock price has fallen about 13% since its first day on the market and continues to fall, falling 4.1% on Wednesday to close at $52.91.

This isn't the only hyped AI semiconductor stock that Wood has steered clear of in recent months. Fang has also adopted a cautious attitude towards NVIDIA. Her flagship fund ARKK has cleared NVIDIA at the beginning of this year, and several other funds have also been holding on to NVIDIA stocks recently.

Wood defended the decision in May, saying it was part of Ark's broader strategy to "move into another set of games that most people haven't discovered yet."

However, unlike Arm, the company's stock price has risen significantly since Ark reduced its holdings in Nvidia stock, up more than 200% since the beginning of the year, although it has cooled off in recent weeks.