Cathie Wood has been busy this week. The Ark Invest co-founder, CEO, and ace stock picker added to five of her existing growth stocks on Wednesday. I covered two of those names yesterday. Let's dive into the other three purchases.
What's she buying now? Some of the names on her Wednesday shopping list included Advanced Micro Devices(NASDAQ: AMD), Pinterest (NYSE: PINS), and Intellia Therapeutics(NASDAQ: NTLA). Let's take a closer look at some of her latest additions.
1. Advanced Micro Devices
Unlike most plays on surging demand for AI chips, AMD is trading slightly lower in 2024. The stock has shed a quarter of its value since peaking in February, even after posting better-than-expected results this week.
It's true that overall growth has slowed for AMD after rattling off three straight years of at least 44% top-line growth through 2022. Revenue declined 4% last year, with an even bigger 35% decline on the bottom line.
Revenue growth has turned positive starting in the second half of last year, but the year-over-year increases over the last four quarters have failed to top 10%. It doesn't mean that AMD has a problem.
Image source: Getty Images.
It's easy to see why AMD's 9% increase in revenue may not seem impressive at first glance, but that's burying the lede. Its data center segment saw its revenue more than double to $2.8 billion, fueled by a surge in AMD Instinct GPU shipments. The segment now accounts for nearly half of AMD's revenue.
Obviously, a 115% year-over-year revenue pop for what's now the company's largest business means there's pain elsewhere with an overall increase of just 9%. AMD's client, gaming, and embedded segments suffered year-over-year declines of 49%, 59%, and 41%, respectively, on the top lines.
The quarter still cements AMD's status as an AI play, especially as it raised its full-year forecast for AI chips revenue from $4 billion to $4.5 billion. The 9% increase in revenue, along with earnings per share skyrocketing eightfold, were both ahead of analyst expectations. Wood was a buyer on Wednesday as the shares moved 4% higher on the well-received financial update.
2. Pinterest
Unlike the market's bullish reaction to AMD's strong quarter this week, Pinterest became a Goldilocks house overtaken by bears. Shares of the company behind the visual-discovery engine plummeted 14% on Wednesday after announcing its second-quarter results.
Looking back, the numbers were great. Revenue rose 21% to $854 million, and adjusted earnings per share climbed 38% to $0.29 a share, topping analyst estimates on both ends of the income statement. It closed the period with a record 522 million active accounts, a 12% increase. Monetization is also humming along nicely, with average revenue per user rising 8% over the past year.
The problem here is the windshield and not the rearview mirror. Pinterest is eyeing $885 million to $900 million in revenue for the current quarter, 16% to 18% more than it delivered for the third quarter last year. This is below the $909 million that Wall Street pros were targeting.
It's like a bad dessert after a solid entree, but bulls shouldn't be discouraged -- especially given the lower bill at the end of the meal after Wednesday's sell-off. Pinterest's guidance three months ago called for just a 15% increase in revenue for the second quarter, but it delivered a 21% increase. If history repeats itself, Wood's move to buy into the sell-off could be worth pinning on her Pinterest board.
3. Intellia Therapeutics
Find yourself someone who loves you as much as Wood loves gene-editing stocks. Shares of Intellia Therapeutics are trading lower in 2024, down a blistering 38% over the past year.
Intellia still offers potential as a developer of CRISPR-based therapies tackling inborn genetic maladies. A couple of its candidates are even in or entering the final phase of clinical trials to become widely available in the U.S. market. Earlier this week, it received authorization to initiate a Phase 1/2 study in the U.K. for its potential treatment for a rare genetic lung disorder.
Intellia's CFO did move on last month, but that's not necessarily a red flag. A notable event this summer came from the publishing of results from a proof-of-concept study showing that it's possible to safely redose the company's leading gene-editing therapy candidate. More importantly, the second dose appears to be providing more complete relief than before. In short, the financial upside for a treatment just moved higher for Intellia, even as its stock is trading lower this year.
Opportunity appears to be knocking. Wood has no problem opening the door when that happens at a discounted price.
Should you invest $1,000 in Advanced Micro Devices right now?
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,050!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 29, 2024
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intellia Therapeutics, and Pinterest. The Motley Fool has a disclosure policy.
