Missed out on "Wood Sister" of NVIDIA, looking to ride the AI wave! Announced investment in xAI founded by Musk

According to the Zhītōng Finance APP, Cathie Wood, known as "Wood Sister", the founder and leader of Ark Investment Management, recently invested in xAI, an artificial intelligence startup founded by Tesla CEO Elon Musk. This move by Ark is seen as a bet on the emerging artificial intelligence industry that is expected to bring about a new revolution in global technology. In April, the institution announced its investment in OpenAI, a Silicon Valley artificial intelligence unicorn known for developing ChatGPT. This indicates that Ark, under Cathie Wood's management, aims to ride the wave of global AI deployment by leveraging its stakes in OpenAI and xAI, betting on the reshaping of the global technology landscape and the significant improvement in human social productivity.

Ark's venture capital fund, Ark Venture Fund, disclosed this shareholding news in an email to its clients on Tuesday. Brett Winton, Ark's Chief Futurist, revealed in an interview that the xAI shares held by the fund account for approximately 2% of its total assets. A month ago, the fund disclosed its stake in OpenAI, which accounted for about 4% of its total assets, emphasizing OpenAI's leading position in the "Cambrian explosion" of artificial intelligence capabilities. The closed-end interval fund also holds shares in another artificial intelligence startup, Anthropic, often referred to as a rival to OpenAI, representing about 5% of its total assets.

In recent years, OpenAI, which successfully developed ChatGPT and the Sora text-to-video large model, has raised substantial funds, with a significant portion coming from the US tech giant Microsoft. Microsoft has invested approximately $13 billion, becoming OpenAI's largest shareholder.

Winton mentioned in a phone interview, "xAI has access to the distribution scale and real-time data of one of the world's largest social platforms, X (formerly known as Twitter), setting it apart from any other artificial intelligence technology company, especially when combined with Musk's fervent focus on AI speed." "We expect that by the end of 2030, the value of large-scale artificial intelligence models will reach trillions of dollars."

It is known that the AI startup xAI, which has recently gained significant attention, was founded in 2023. On May 26, the company announced in a blog post that it had raised as much as $6 billion in Series B financing. Musk has been one of the earliest supporters of artificial intelligence technology. Before OpenAI launched ChatGPT at the end of 2022, he had previously supported OpenAI and was one of its earliest founders and contributors. However, in 2018, Musk chose to leave the OpenAI board due to disagreements with the executives Musk's AI Ambition: Building a "Supercomputing Factory"

The above-mentioned financing received by xAI has brought the valuation of this AI startup, established just a year ago, to $24 billion. xAI stated that this substantial funding will be used to fully promote the first batch of AI software products to the market and to build advanced AI infrastructure to accelerate research and development.

The significant financing of xAI is a positive signal for the industry, indicating that global funds are still willing to invest in the field of AI and support the continuous development and iteration of AI technology. More importantly, xAI has not discussed developing internally designed AI chips like Amazon (AMZN.US), Google's parent company Alphabet (GOOGL.US), Meta, the parent company of Facebook (META.US), and Microsoft (MSFT.US), which means that a large amount of newly raised funds may be spent on NVIDIA's (NVDA.US) AI GPU hardware, and it is highly likely that funds will be concentrated on purchasing NVIDIA's newly launched Blackwell architecture AI GPU.

NVIDIA has been deeply involved in the global high-performance computing field for many years, especially with its CUDA computing platform, which is popular worldwide and is considered the preferred software and hardware collaborative system for high-performance computing in areas such as AI training/inference. NVIDIA's most popular AI chips, the H100/H200 GPU accelerators, are based on NVIDIA's groundbreaking Hopper GPU architecture, providing significantly more powerful computing capabilities compared to previous generations, especially in floating-point operations, tensor core performance, and AI-specific acceleration.

Even more significant is that the performance of the AI GPU based on the Blackwell architecture far exceeds that of the Hopper architecture. In the GPT-3 LLM benchmark with 175 billion parameters, the inference performance of the GB200 on the Blackwell architecture is 7 times that of the H100 system, and it provides training speeds 4 times faster than the H100 system.

Regarding when the Blackwell architecture AI GPU will be deployed in major data centers, NVIDIA CEO Jensen Huang stated that the new Blackwell architecture AI GPU products will be shipped in the second quarter of this year, production will increase in the third quarter, and they will be officially deployed in data centers in the fourth quarter. It is expected that "Blackwell architecture chip revenue will see significant growth" this year.

In NVIDIA's press release on the Blackwell architecture AI GPU released in March this year, Musk publicly stated that NVIDIA's AI hardware is the "best AI hardware." Musk also likened the AI arms race among tech companies to a high-stakes "poker game," where companies need to invest billions of dollars annually in AI hardware to stay competitive. According to media reports, at an investor event in May this year, Musk stated that xAI plans to build a super artificial intelligence computer with astonishing scale and performance, calling it a "supercomputer factory." Musk also mentioned that he aims to have this supercomputer operational by the fall of 2025 and will personally ensure timely delivery.

Earlier this year, before the release of NVIDIA's Blackwell architecture AI GPU production plan, Musk revealed that training the Grok 2 large model would require around 20,000 NVIDIA H100 AI GPUs, while training the next generation of large models and higher iteration versions would require at least 100,000 NVIDIA H100 AI GPUs.

"Wood Sister," who seems to have "missed an era," is trying to seize the global AI trend

It is understood that the venture capital fund Ark Venture Fund was established in September 2022, investing in both public and private companies, including Musk's SpaceX, as well as well-known companies such as Epic Games, Freenome Holdings, and Relation Therapeutics. Private, unlisted companies account for about 80% of Ark Venture Fund's total holdings.

Known as the "number one fan of Tesla" and a "staunch supporter of Musk," Cathy Wood made a name for herself during the COVID-19 pandemic by heavily betting on Tesla (TSLA.US) and becoming a top Wall Street fund manager, persistently bullish on Tesla up to $2000.

However, this year, the flagship ETF managed by her, the $7 billion Ark Innovation ETF (ticker: ARKK), has faced difficulties as the stock price of Tesla, one of its key holdings, plummeted due to factors such as cooling global demand for electric vehicles. Year-to-date, ARKK's value has fallen by 16%, while the tech stock benchmark index, the Nasdaq 100, has risen by 12% and repeatedly hit new highs. With increasing losses, ARKK ETF's assets under management have dropped from a peak of $28 billion to $7 billion.

Before Ark Venture Fund invested in startups like OpenAI and xAI, Ark Investment's flagship fund ARK Innovation (ticker: ARKK) seemed to have "missed an era." The flagship fund sold off NVIDIA (NVDA.US) prematurely, and Wood, known as a top Wall Street fund manager, did not fully benefit from NVIDIA's stock price surge of over 600% since 2023, earning it the title of "the strongest shovel seller in the AI field." Despite "Wood Sister" publicly expressing belief in future disruptive technologies, historical data collected by institutions shows that under the leadership of "Wood Sister" since early 2023, ARK Innovation's main strategy has had no involvement with the AI boom's biggest winner, NVIDIA. Since early 2023, ARK Innovation's flagship ETF product has not held a single share of NVIDIA stock.

However, having missed out on NVIDIA, "Wood Sister" is now attempting to seize the wave of global corporate AI deployment. The Ark Venture Fund, a venture capital fund under Ark, recently invested in OpenAI, known as the "OpenAI rival" Anthropic, and xAI founded by Musk.

In a recent research report released by the international bank UBS, it pointed out that the global technology industry has just begun a large-scale growth cycle. UBS expects that by 2027, AI technology will achieve extremely broad application across various industries in major economies globally, driving AI large models and AI software applications to become a sub-market worth as much as $225 billion. Compared to the $22 billion scale in 2022, this can be described as an epic leap, with an expected compound annual growth rate of up to 152% during this period. UBS also predicts that the total revenue of the AI industry will increase 15 times, from approximately $28 billion in 2022 to $420 billion in 2027.

Brett Winton, Chief Futurist at Ark and member of the investment committee, previously stated in a media interview, "Our fund is relatively new and small, and it must be said that the incremental progress in the field of artificial intelligence base models is even faster than we expected." "We expect that by 2030, the potential market value of technology companies focusing on base models will reach $16 trillion."