The chipmaker “is priced ahead of the curve,” the ARK Invest CEO wrote on Twitter on Monday, suggesting the stock is too overvalued for it to be a good investment.

Since 2014, @ARKInvest has believed that Nvidia saw the AI future before most other chip companies, and now we believe it will continue to power the AI age. At 25X expected revenue for this year, however, $NVDA is priced ahead of the curve.

— Cathie Wood (@CathieDWood) May 29, 2023

Wood’s ARK Innovation ETF cut its shares in Nvidia in mid-January. The chipmaker’s shares are up 172% for the year thus far.

Nvidia experienced the third largest single-day jump in market value on Thursday after the company predicted $11 billion in sales for the current quarter, far higher than analyst expectations. The chipmaker now has a market capitalization of $960 billion, behind just four other U.S. companies. 

Nvidia’s rosy guidance also lifted the entire sector, with A.I.-affiliated stocks gaining $300 billion in value on Thursday. 

The rally in A.I.-affiliated tech companies is leading some observers to worry about a bubble. Economist David Rosenberg said that the boom looked “very weird” in a Thursday interview on CNBC, adding that there was “no question we have a price bubble.”

Yet unlike in previous bubbles when “we were getting tremendous valuations from companies that had no earnings,” Nvidia is a real, good company,” said Wharton professor Jeremy Siegel in a Monday CNBC interview. The boom in tech stocks “is not a bubble yet,” he noted. 

Nvidia shares are up by over 3% in premarket trading on Tuesday, breaching $400 a share.

Boom and bust

Wood may also be concerned about the boom-and-bust nature of the chip sector. On Friday, the tech investor said she was worried about “shortages” in an interview with Bloomberg. “I begin to think about the cyclicality of a group,” she said.

Chip companies are suffering from a slump, as the sector corrects from the chip shortages in 2020 and 2021. Consumers are buying fewer PCs, smartphones, and other consumer electronics, suppressing demand for the chips that power them. Manufacturers and retailers are also selling off excess inventory stockpiled during the chip shortage. 

Nvidia, too, is still feeling the effects of the chip slump, reporting a 38% year-on-year decline in quarterly revenue from its gaming division. 

Yet the company clearly now sees A.I. as its future, with CEO Jensen Huang announcing a swath of new A.I. services, products, and partnerships on Monday, including a new supercomputer platform to help large tech companies create the next viral A.I. sensation, like ChatGPT.

Tesla

On Monday, Wood called herself an early believer in Nvidia. “In 2014, most investors considered Nvidia, priced at ~$5, simply a PC gaming chip stock. ARK Invest’s first principles research pointed to Nvidia as the premier equity play on A.I.,” she tweeted. 

But Wood said that investors are wrong to think that Nvidia is “the only A.I. play.” Electric-car maker Tesla “is the most obvious beneficiary of the recent breakthrough in A.I.,” she tweeted on Monday, the result of its investments in automated driving. 

In our view, $TSLA – at 6X revenues – is the most obvious beneficiary of the recent breakthroughs in #AI, as it aims for an $8-10 trillion revenue TAM in autonomous mobility by 2030. But, based on our research for the last five to six years, @ARKInvest sees dozens of AI winners!

— Cathie Wood (@CathieDWood) May 29, 2023

Wood called Tesla “the biggest A.I. play out there” in a conversation with Fortune editor-in-chief Alyson Shontell at the MPW Next Gen Summit in May. Tesla could be in the “pole position” to grab “the lion’s share” of the autonomous taxi market, at least in the U.S., the investor predicted, estimating that robotaxi platforms could be worth $8 trillion to $10 trillion globally. 

Tesla CEO Elon Musk believes the company will roll out full self-driving this year, which will help drive profits. Yet the company had to pause installations of its beta full self-driving software earlier this year, after the National Highway Traffic Safety Administration deemed it a “crash risk” and asked for a safety recall. 

Customers using Tesla’s existing automated driving services have reported thousands of instances of braking problems and abrupt acceleration, according to a set of complaints, covering a period between 2015 and March 2022, leaked to German outlet Handelsblatt before the weekend.