Ark Reverses CoreWeave Position Amid 40% Stock Decline
Ark Investment Management bought $19.2 million of CoreWeave shares just three days after selling a portion of its position. The move comes as the AI infrastructure firm struggles with profitability and a significant drop from its May peak.
Cathie Wood’s Ark Investment Management executed a rapid reversal in its CoreWeave position this week. According to data reported by GN stocks/sp500, Ark funds purchased 239,083 shares of the AI cloud provider on September 17. At a closing price of $80.20, the acquisition totaled approximately $19.2 million. This buy order followed a sale of 64,923 shares on September 14, indicating a sharp shift in tactical positioning within days.
The timing of the purchase coincides with significant pressure on CoreWeave’s valuation. The stock has declined 13% over the past month and is down more than 40% from its year-to-date peak in May, when it traded near $138. CoreWeave, a Nvidia-backed infrastructure company serving major clients like Microsoft and Google, remains unprofitable. To support its expansion, the company confirmed plans on September 17 to raise $3 billion through convertible senior notes due in 2033, with an additional $500 million option.
Long-term underperformance persists
Despite recent tactical moves, Ark’s flagship Innovation ETF (ARKK) continues to lag behind broader market benchmarks over longer horizons. As of September 17, the ETF’s five-year annualized return stands at -6.32%, compared to the S&P 500’s 11.49% annualized gain over the same period. Morningstar analysts note that the fund has destroyed nearly $5 billion in investor wealth over the decade ended in 2025, ranking it as the fourth-largest wealth destroyer among mutual funds and ETFs.
This underperformance follows a volatile history for the fund. While ARKK delivered a 153% return in 2020 and outpaced the S&P 500 by double digits in 2024, it suffered a decline of over 60% in 2022. In the current year, the ETF is up 14.04%, slightly ahead of the S&P 500’s 11.38% gain, but the five-year gap highlights the cost of the firm’s high-volatility strategy for long-term holders.
Capital outflows challenge strategy
Investor sentiment has soured, resulting in substantial capital withdrawals. Data from VettaFi shows that ARKK experienced roughly $1.55 billion in net outflows over the 12 months through September 17. This capital flight contrasts with Wood’s public optimism regarding AI’s role in driving corporate productivity. Wood argues that U.S. pre-tax profits, currently at 13.2% of GDP, are near multi-decade highs, partly sustained by companies leveraging AI to protect margins.
CoreWeave remains loss-making
CoreWeave’s business model relies on GPU-powered computing for AI workloads, a sector Wood believes will separate high-performing firms from laggards. However, the company’s lack of profitability remains a key risk factor. The recent debt raise of $3 billion signals a need for heavy capital expenditure to maintain its infrastructure. While Wood sees AI as a major driver of economic growth, the financial reality for firms like CoreWeave involves significant leverage and unproven revenue sustainability against a backdrop of intense competition from larger cloud providers.
