Even as investor sentiment was dampened by concerns about an AI bubble, Cathie Wood’s ARK Invest kept accumulating a pile of Elon Musk’s SpaceX stock. The latest acquisition came as the SPCX share price continued dropping, nearing the IPO price of $135.
Cathie Wood Continues Buying SpaceX Stock
On Monday, July 13, the SpaceX stock closed at $139.14, 4.24% lower in the intraday session. During the day, ARK Invest purchased 130,241 shares of SPCX into three exchange-traded funds, according to its daily trading disclosures.
Despite the recent weakness, this purchase represents Cathie Wood’s bullish take on the SpaceX stock. ARK Invest raked in SPCX shares via its ARK Innovation ETF (ARKK), the ARK Autonomous Technology & Robotics ETF (ARKQ) and the ARK Next Generation Internet ETF (ARKW). The total investment came around $21.3 million.
The latest drop has brought the SpaceX stock price back down below the reported crucial level of $150. Now, $145 serves as a major resistance level that earlier acted as a crucial support level, per CoinGape analysis.
If the share price continues to decline, it risks falling below the IPO price of $135. However, the analysis went on to highlight that the shares had rallied after ARK Invest’s buying spree last week. At the time, Cathie Wood’s ARK bought $52 million in SpaceX stock.
Still, the MACD indicator had taken a negative turn, indicating bearish momentum was still in place. This could keep the SpaceX stock price from getting back to $150, the analysis added.
The AI Bubble Warning In Focus
The surge in Cathie Wood’s purchasing activity for SpaceX coincides with a draft report from the U.S. Department of the Treasury. That report has raised concerns that the rapid development of AI could be a threat to the economy comparable to that of the dot-com bubble.
Researchers in the field of careers at the University of Texas, Austin (NOTUS) have determined that the companies providing artificial intelligence are much more interwoven with the U.S. economy as compared to internet companies 25 years ago. The report states that the impact could radiate beyond tech stocks.
They warned that it could spread to private credit markets, cloud service providers and semiconductors as well as utilities and firms financing large-scale data center projects if the AI sector goes into a major downturn.
Despite the AI bubble warning, the analysts stopped short of forecasting an imminent crash. Rather, they laid out a bearish scenario in case AI companies do not achieve the level of productivity and profitability that is expected.
Here, they warned investment growth could slow, investor confidence could be dampened, and economic growth could be reduced. Supply chain disruptions, geopolitical tensions, electricity shortages and funding limitations for data centre infrastructure were also identified as risks, the report noted.
What Do Experts Say?
Meanwhile, market watchers are speculating on whether the AI craze has gone too far. In a recent Substack post, Bernstein and Cummings say that the gains of the leading AI stocks suggests a bubble that is “still inflating.” The analysts also said, “The aggressive push into AI is leaving these tech giants with significantly less cash.” Moreover, they added that technology-based investments have reached nearly 5% of the U.S. GDP, surpassing the dot-com era.
On the other hand, BlackRock analyst Rick Rieder stated that the asset management firm would be cutting its stake in companies focused on artificial intelligence. Instead, they are looking to move towards those that will benefit indirectly from the AI boom. One of those beneficiaries is Bitcoin miner TeraWulf that has signed a 20-year contract with Anthropic to host one of its data centers.
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