TORONTO — When Cathie Wood scans the global technology sector, one innovation stands out, even as its proliferation creates new opportunities.
Artificial intelligence, the U.S. tech investment maven said, is "the biggest catalyst" for the innovation she sees taking place across the five major areas funded by her firm, Ark Invest. Those areas of focus are robotics, energy storage, artificial intelligence itself, Blockchain technology and life sciences.
"AI has a role, of course. It is its own platform, but it is also playing a role in the biggest convergence among technologies that we have ever seen," she said.
The convergence is part of why she said Tesla holds the largest position in her investing strategy. The company, she reasoned, is not just playing in the autonomous vehicles and robotics space but also bound to dabble in AI.
"We're getting awfully close to autonomous transportation and then people, I think, will have a really good idea about how the physical world and the digital world are converging here to create explosive opportunities," she said.
Wood's optimism around AI was on full display during a recent visit to Toronto, where she was hosted by the Bank of Montreal, which distributes her funds in Canada.
It's been a rocky few years for Ark and Wood, who gained a reputation for being a star stock-picker when her flagship fund soared 150 per cent in 2020, when tech firms like video conferencing platform Zoom and streaming giant Roku benefited from the time people were spending at home during COVID-19-related lockdowns. The gains Wood delivered through her New York-based Ark Innovation ETF well surpassed the S&P 500's then-16 per cent return.
But Wood's strategy appeared to backfire when health measures were lifted and the tech sector began facing the sobering reality that its pandemic growth projections likely wouldn't materialize. Layoffs at companies as big as Google, Amazon and Shopify Inc. followed.
Ark Innovation tumbled almost 68 per cent in 2022 alone, according to data compiled by financial markets data firm LSEG Data & Analytics. From the start of 2022 to now, it's dropped nearly 53 per cent.
As Wood now works to put her fund back on top, the world has become abuzz about AI. Companies are scrambling to implement it into their systems and workflows, while governments consider how to regulate the potential risks it causes.
AI is still in the early stages, said Wood, who compares its current boom to the advent of the internet in the 1990s.
"There was a lot of talk about regulation back then," she recalled.
"If it had been regulated, the media industry wouldn't be what we have today. We wouldn't have Uber or Airbnb or anything like that."
When it comes to AI, she said the tech industry is currently focused on taking a "light touch."
U.S. President Joe Biden has issued an executive order requiring AI developers to share safety test results and other information with the government, while Canada tabled an AI-centric bill in 2022, but it won't be implemented until at least 2025.
In the meantime, Canada has resorted to a voluntary code of conduct, which IBM, BlackBerry and a few dozen other companies have signed.
As companies navigate the critical eye being cast on AI by potential regulators, Wood said, "Half the solution is understanding the problem and if your company is deploying AI, typically it's going to be mission critical at the end of the day."
She feels Canada is well positioned to weather the shift toward AI because of the foundation the country has built around the technology.
For starters, she said she's been impressed with the AI talent in Canada.
"We're seeing many of our U.S. companies putting divisions up in Canada because the AI talent is so deep here and there is such a shortage out there," she said.
She credits the Waterloo, Ont., tech hub with some of the country's talent richness, but also Shopify, the Ottawa-based e-commerce software giant.
Its star AI product is Sidekick, a chatbot the company's merchants can use to ask questions about business operations, but it also offers services that use the technology to draft emails and help categorize products.
Wood considers Shopify to be "forward in its thinking" and "moving very quickly on AI."
Asked what gives her confidence in the brand, even as it battles with the behemoth Amazon, Wood said, "the world is going social in all kinds of ways including commerce and Shopify is the biggest enabler out there."
This report by The Canadian Press was first published July 12, 2024.
Companies in this story: (TSX:SHOP)
Tara Deschamps, The Canadian Press
