Cathie Wood's Ark Investment Management engaged in a tech-buying spree on Monday during the extended rally in the stock market, acquiring notable tech stocks.
What Happened: Through its ARK Next Generation Internet ETF
Additionally, the firm increased its holdings of Taiwan Semiconductor Manufacturing Company Ltd.
Why It's Important: Tech stocks have experienced a significant surge this year, with prominent tech companies leading the charge. The Invesco QQQ Trust
The recent rally has prompted some analysts to approach the potential for further upside cautiously.
Wedbush's Daniel Ives is optimistic about the continued tech rally into the next year. In a note released on Nov. 17, the analyst stated, "Heading into 2024, we believe the tech sector is set up for an acceleration of spending around cloud and AI spending that we believe is being significantly underestimated by the Street."
"While IT budgets are expected to be up modestly in 2024, we believe cloud and AI-driven spending will be up 20%-25% over the next year, with use cases now exploding across the enterprise and consumer landscape," he added.
Microsoft stands out as one of the major beneficiaries of the AI boom, while Meta has emerged from a lackluster phase more streamlined and stands to benefit from the recovery in ad spending and its exposure to AI. TSMC remains a solid and evergreen tech stock due to its diversified customer base for its chips.
However, potential risks such as valuation concerns and uncertainty regarding the interest rate outlook could pose threats to the tech rally. If the Federal Reserve continues with its "higher-for-longer" approach or if the economy falters in the new year, risk appetite is likely to diminish, with tech stocks being the first casualties, as they typically lead the market in either direction.
ARKW concluded Monday's session down 1.54% at $70.79, according to data from Benzinga Pro. The ETF has gained 83.63% year-to-date.
