Cathie Wood Predicts Innovation Will Be Worth $220 Trillion by 2030

Cathie Wood, Founder, CEO and Chief Investment Officer of ARK Invest, recently joined OPTO Sessions to discuss the convergence of five technological platforms — and the transformative impact this will have. She explains how three of these platforms come together in robotaxis, and why she believes that spot bitcoin ETF approval will benefit stocks throughout the theme.

As Founder, CEO and Chief Investment Officer (CIO) of ARK Invest, Cathie Wood is renowned for her visionary focus on disruptive innovation.

While studying for her BSc in Finance and Economics at the University of Southern California, Wood was mentored by Dr Art Laffer, the economist who described the Laffer curve.

After graduating, she worked as an Assistant Economist at the Capital Group in Los Angeles, followed by 18 years with Jennison Associates. Then, after a 12-year tenure at AllianceBernstein — where she managed over $5bn as CIO of Global Thematic Strategies — Wood founded ARK Invest.

Itself a groundbreaking enterprise, ARK provides a variety of thematic ETFs that offer investors targeted exposure to groundbreaking technological trends, including space, robotics, fintech and blockchain.

Catalysing Convergence

Wood sees the current exponential age as a period of convergence between several different technological breakthroughs, all of which are maturing at the same time.

“The seeds for all of them were planted in the 20 years that ended in the tech and telecom bubble,” she tells OPTO Sessions. “They’ve been germinating ever since. And now they’re ready to blossom. They’re ready for prime time”.

Wood explains that this convergence involves 14 different technologies across five ‘platforms’: multiomic sequencing, robotics, energy storage, artificial intelligence (AI) and blockchain. Wood expects annual growth rates of at least 20%, and as much as 50%, for each of these platforms over the coming years.

“AI is a big catalyst here,” she says.

The technology, which burst into public consciousness with the launch of ChatGPT in late 2022, is accelerating both the rates of growth and the convergence of the five platforms. Of particular note are predictions that it will increase the productivity of knowledge workers as much as fourfold over the next six to seven years.

“AI is a big catalyst here.”

“We’re already seeing this with coders,” she says. “Their productivity, at this very early stage, is up anywhere from 50–100%.”

Software as a Taxi Service

One example of how these technologies converge into specific use cases is robotaxis.

These, Wood explains, represent the convergence of three platforms: robotics (because autonomous vehicles [AVs] are a type of robot); energy storage (given that these vehicles are electric and therefore run off battery technology); and AI.

This convergence means that robotaxis are set for a significant revenue burst, which could outdo any other theme. According to Wood, this burst could be worth $10trn over the next 5–10 years. ARK has previously published research suggesting that robotaxis could have a greater impact on GDP than any other innovation in history.

Breaking down the value streams in the theme, Wood explains that ‘platform providers’ will reap the most benefit. Within the theme of AVs, Tesla [TSLA] is a prime example.

Furthermore, Wood envisages a future in which the owners of autonomous cars will be able to generate revenue by having them carry out taxi services while they aren’t using them.

“Go to work, let your car out, let it pick up and then drop people off, earn money while you’re at work, and then it’ll be there for you when you come out of work.” This presents a potential win-win for all parties, but Wood goes even further into the benefits it could have for the providers.

“It’s a software as a service (SaaS) model. Many people think that Tesla’s gross margins will be lucky to get to 25% or 30%, but a SaaS model is an 80–90% gross margin business. That’s where the big surprise is going to be in Tesla.”

In April 2023, ARK published research that estimates a $2,000 share price for Tesla by 2027. This thesis assumes that, by then, 67% of Tesla’s enterprise value will be derived from its prospective robotaxi business.

“A SaaS model is an 80–90% gross margin business. That’s where the big surprise is going to be in Tesla.”

The Future of Blockchain

Wood is known for being a long-term blockchain bull. As she told CNBC last month, her base case is that bitcoin will be worth $600,000 by 2030, and her bull scenario puts it at $1.5m by that date.

She believes that the regional banking crisis that followed the collapse of Silicon Valley Bank in 2023 was “a big wake-up for the financial world in terms of bitcoin”.

“There’s nothing like good price action in a bad market to elicit the interest of investors,” she says, adding that this dynamic led many investors to view bitcoin as a risk-off rather than risk-on asset for the first time.

Wood thinks the security and exchange commission’s recent decision to greenlight spot bitcoin ETFs is another tailwind for the theme, helping to establish it as a new asset class. This, she believes, puts the onus on financial advisors who are sceptical of bitcoin to explain to their clients why they aren’t including it in portfolios.

“There’s nothing like good price action in a bad market to elicit the interest of investors.”

“The history of new asset classes is that when you put an allocation into one of them, your existing portfolio’s return per unit of risk goes up because of the diversification and the low correlation to other assets.”

While some have suggested that spot bitcoin ETFs like the ARK 21Shares Bitcoin ETF [ARKB] could prove a headwind for longer-standing bitcoin stocks such as Coinbase [COIN], Wood disagrees.

“Anything that gets more investors involved in the ecosystem is important,” she says. “As investors learn more and more about bitcoin, many will use this as a bridge into establishing their own wallets… So we think this is going to be a feeder for Coinbase”, she says.