Cathie Wood's Amazon Bet: From 'Kiss Of Death' To Bold Investment — Is She Right This Time?

Cathie Wood, the founder and CEO of ARK Investment Management, is again making waves with her investment decisions regarding Amazon.com, Inc. AMZN.

What Happened: Known for her high-risk, high-reward strategy, Wood’s latest moves have ignited a debate: Is her confidence in Amazon a signal of the tech giant’s impending turnaround, or is it another potentially ill-fated gamble?

Wood’s Amazon Purchases Over The Last Few Months

Wood has been steadily increasing ARK’s stake in Amazon over the past few months:

• On Tuesday, she acquired 76,505 shares for $13.98 million through the flagship ARK Innovation ETF ARKK.
• Last month, she bought 22,143 shares through the ARKQ ETF.
• In August, she purchased 187,843 shares across five ARK ETFs.

The Bull Case For Amazon

Earlier it was reported that Wood is attempting to recover from recent market downturns by purchasing shares in tech companies that have seen significant declines

Her investment strategy appears to be pivoting toward companies with long-term reliability and diversified growth potential.

Amazon fits this bill, particularly due to its cloud services division, Amazon Web Services, or AWS.

In its latest earnings report released in August, Amazon announced that AWS posted a 19% growth.

See Also: Cathie Wood Predicts Trillion Dollar Revenue Opportunity For Tesla In Autonomous Vehicles: ‘Winner-Takes-Most’ In AI And Driving Tech

Challenges On The Horizon

Amazon is currently facing an FTC investigation into alleged anti-competitive practices. On Monday, a judge’s ruling allowed antitrust lawsuits against Amazon to proceed.

The e-commerce landscape is also becoming increasingly crowded, with both established players and emerging platforms vying for market share.

Wood is also an investor in Amazon's rival Shopify Inc. SHOP.

Amazon currently has a market capitalization of $1.917 trillion, making it the fifth most valuable listed company in the world.

From the end of August till date, Amazon’s stock has gained 2.36%, slightly underperforming the broader Nasdaq index, which gained 2.65%.

Opinions Are divided On Wood’s Investment

Optimists view it as a strategic move that could pay off handsomely if AWS continues its strong performance and Amazon successfully navigates its challenges.

However, Wells Fargo has already downgraded Amazon’s rating from Overweight to Equal-Weight, pointing to slowing growth and increased competition as the reasons for the adjustment.

Skeptics point to Wood’s track record of high-profile investments that haven’t always yielded positive results. Remember when Jim Cramer, who has often been the target of numerous jokes, called Wood the "kiss of death" in 2022?

"She could be right, she could be wrong," George Kailas, CEO of Prospero.ai, a fintech investment platform told Fortune in August. "She's definitely been both in the last couple of years."

Earlier this year in July, Wood defended the ARK Innovation ETF, which has experienced significant volatility.

At the time, in a letter to investors, Wood acknowledged challenges due to the macro environment and stock selections but reaffirmed her commitment to investing in disruptive innovation.

"Exiting our strategies now would crystallize losses that lower interest rates and reversions to the mean should transform into meaningful profits during the next few years," she wrote, adding, "We are resolute."

Price Action: Since the year began, ARKK has fallen almost 11% while Amazon’s stock has shot up 20.26% in the same period. The stock of the Andy Jassy-led company has fluctuated between a 52-week high of $201.20 and a 52-week low of $118.35, according to data from Benzinga Pro.

Read Next:

• Cathie Wood’s Ark Invest Buys $4.5M Of PayPal And $3.5M Of Pinterest Shares, Sells Own Bitcoin ETF Amid Crypto Surge, And Continues Offloading Palantir

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors