Cathie Wood Says Market Anxiety Signals Durable Growth

Cathie Wood is using this week's stock market volatility to her advantage.

The CEO of Ark Invest told CNBC on Friday that the current jitters among investors actually reinforce her optimism. She views the anxiety as a sign that the ongoing bull market is more durable than the speculative bubbles of the past.

U.S. equities sold off sharply on Thursday, reversing the initial rally seen after the midterm elections. AI-related stocks led the decline, sending the tech-heavy Nasdaq Composite into correction territory. Tech stocks staged a tentative recovery on Friday. The sell-off on Thursday was driven by concerns that a Democrat-led Congress might slow down data center construction. Broader worries about artificial intelligence capital expenditure, cash flow, debt, and circular financing have sparked volatility throughout this year.

Wood, whose firm manages funds focused on tech and innovation, noted a wall of worry pervading financial markets. She contrasts the current climate with the tech and telecom bubble of the 1980s and 1990s. During that period, she recalled, there was little worry as people assumed prices would rise indefinitely. In contrast, investors have been concerned from the beginning about how much firms are spending on AI development and how rapidly that spending is taking place.

"I always feel better when the market is worried, because that tends to suggest a more durable bull market, and I don't think we've derailed this bull market," Wood said. She pointed to the shift among hyperscalers from extreme levels of positive free cash flow to negative free cash flow. This shift has unsettled markets for quite some time.

In 2025, her flagship Ark Innovation ETF gained more than 35%, far outperforming the S&P 500's 16.4% rise and the Nasdaq Composite's 20.5% rally. When asked on Friday whether markets were near the end of the current bull run, Wood replied that she did not think so. She believes the market is in the middle of a technology revolution, citing the development of robotaxis and AI agents.

One risk that could become a showstopper is the rising cost of capital. Interest rates and bond yields have risen sharply this year as the U.S.-Iran war pushes inflation higher across the globe. Yields on corporate bonds have also increased, with creditors demanding greater compensation for lending to companies. Wood stated that the current correction is partly caused by what is happening in the bond markets.

Wood argued that the wall of worry has been built by senior leaders in the financial world who were young during the previous bubble. These elder statesmen and women keep the wall of worry in place. Bond investors are now joining this group. In the past, technology was software with low fixed costs and viral apps with very high margins. AI is high fixed cost, so bond investors are experiencing a journey into the technology world that they have not taken before.

However, Wood noted that AI hyperscalers are insulated by opportunities for growth. If a company believes that taking on debt will accelerate its growth rate, it hardly matters what happens to interest rates for those companies. Her advice to investors in this volatile environment is to identify high-conviction positions and double down on them. When a rally occurs, she suggests taking some profits. When a sell-off occurs, having taken profits provides the psychological wherewithal to move back in.

Ark Invest has been concentrating towards its highest conviction names in the last week or so. The firm's SpaceX position has increased. Wood noted that the controversy around data centers on Earth is giving data centers in space a bigger opportunity. In 2027, she expects the equity rally to continue. She described the post-election turbulence as two steps forward and one step back, stating that the revolution will become clearer next year and the market will do well.