Investor Cathie Wood predicts a ‘shudder’ in Big Tech valuations, saying higher rates may test investor faith
Investor Cathie Wood said the U.S. economy may be in for a “shudder” as it adjusts from an environment of decreasing interest rates to one where interest rates are rising.
Wood, the CEO of ARK Invest, said sometime in the next year there will be a shift toward rising interest rates, even as the Fed is widely predicted this week to cut rates for the second time this year.
When this happens, “there will be a shudder,” Wood told CNBC, even though history shows higher interest rates aren’t necessarily correlated with lower innovation that fuels market gains.
“Even in 2017 when interest rates went up, we had phenomenal performance,” said Wood. “I want to disabuse people of that notion. But nonetheless, the way algorithms work these days, we think that there will be a reality check.”
Wood said she is not deterred by the possibility of a stock market pullback, and ARK Invest is continuing to invest in innovation plays around robotics, AI, blockchain, and energy storage.
Multi-omic sequencing in the health care space—a deep analytical approach using multiple layers of biological data to diagnose diseases—is “the most underestimated and underappreciated” area of innovation ARK is investing in, she said.
Overall, Wood is still bullish on the economy. While some fear a “bubble” on the horizon thanks to the massive increase in tech stock valuations, in part led by the AI boom, Wood said AI is not causing a bubble.
She bets that a coming productivity boom will help push up the stock market even further later this year.
“We think that the economy, the U.S.—and the rest of the world, of course will participate—is going to move into a productivity driven boom, just in time for our midterm election,” Wood said.
Economic uncertainty
There are some signs that corporations are using AI to get more out of fewer workers. Amazon this week it would cut 14,000 office workers this year as it invests further in AI to “realize efficiency gains.” Salesforce also laid off 4,000 workers from its customer-support division earlier this year.
Still, it’s unclear how the economy will fare in the coming months amid instability. The Trump administration, despite passing an effective corporate tax, the Big Beautiful Bill earlier this year, which Wood said will fuel innovation, has also whipsawed on tariffs. Last week, President Trump levied an additional 10% tariff on trading partner Canada after the Province of Ontario aired an anti-tariff ad that featured former President Ronald Reagan.
Wood, though, credits the administration with its approach to regulation and innovation and said its policies could help business overall.
“They’re very focused on deregulation, massive deregulation. We have a crypto and AI czar never have had that before, and they’re focused on business friendly policies—inviting more foreign direct investment into the United States, especially in the manufacturing realm.”
