A ‘$28 trillion opportunity’: Ark Invest reveals its top AI plays right now
As the buzz around artificial intelligence continues to build, investors are looking to identify the sectors best placed to benefit. Ark Invest’s Tasha Keeney is no different. Keeney, director of investment analysis and institutional strategies at the asset manager, estimates that the equity market capitalization attributable to innovation will jump to $220 trillion by the end of the decade, from the $15 trillion-$20 trillion it is at right now. “Most of that … we expect is actually attributable to AI,” she said. Ark Invest — which has a particular focus on innovation — is invested in segments including autonomous vehicles, drones and robotics, energy storage, 3D printing, and space exploration through its Ark Autonomous Tech & Robotics ETF (ticker ARKQ). After a bumper 2020 following the pandemic, the fund has struggled and is currently down around 3.7% year-to-date. Autonomous cars: A $28 trillion opportunity Autonomous cars is one area related to AI that Keeney is “particularly excited about.” “Autonomous cars are already driving in major cities today across the globe. We think that in the next 10 years, that will scale up. I think that opportunity alone could be worth $28 trillion in enterprise value because this will be very disruptive,” she told CNBC’s “Street Signs Asia” on Mar. 8. A company that stands out to her is Tesla — also a long-time favorite stock of Ark Invest’s Cathie Wood . Naming it as a leader in the industry, Keeney pointed to “incremental progress on their self-driving technology” as one of the company’s merits. “Sure, it’s not perfect yet, it still messes up in specific scenarios. But what we’re relying on here is the data advantage that Tesla [has and] that’s very important in AI in general,” she said. Shares in Tesla are down around 1.8% over the past 12 months. Ark Invest has a target price of $200 on the stock, but Keeney said this is in the process of being updated. Tesla was trading around $178 on Friday. A number of analysts are now cautious on the stock. According to Factset data, of 49 analysts covering it, 23 have hold ratings, 18 give it a buy or overweight rating, and 8 have a sell or underweight rating. Their average price target is $210.65. Autonomous drones: A ‘very hot topic’ Beyond automakers, Keeney is looking to ride the autonomy wave through opportunities in drones. “These days, it’s a very hot topic, because … we’re seeing conflict increase globally,” she said, naming Kratos Defense and Security Solutions and AeroVironment as two stocks on her radar thanks to their lower cost and more affordable drone platforms. Kratos makes defense technology such as jet-powered drone systems, while AeroVironment makes munitions, drones and has “long been a leader” in surveillance technology, according to Keeney. Keeney emphasized that drone technology can transcend military use cases and be applied across industries. For instance, supermarket chain Walmart has partnered with drone delivery players Wing — backed by Google parent Alphabet — and Zipline to deliver food to consumers. “Ultimately … it brings down costs for the end consumer,” she said.
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