In this article, we will list the Cathie Wood 2026 Portfolio: 5 Best Stocks to Buy. Please visit Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy, if you would like to see the extended list and the methodology behind it.
5. Palantir Technologies Inc (NASDAQ:PLTR)
ARK’s Stake Value: $574.5 Million
Cathie Wood’s ARK decreased its stake in Palantir Technologies Inc (NASDAQ:PLTR) by 20% in the fourth quarter to $574.5 million. Overall, the stock saw an increase in hedge fund sentiment as 89 funds in Insider Monkey’s database reported positions in the company in the fourth quarter, up from 81 funds in the previous quarter.
Palantir Technologies Inc (NASDAQ:PLTR) is down 10% so far this year, but some believe it’s positioned to rebound amid rising geopolitical tensions across the globe. The company makes AI-powered battlefield software and data analytics systems used by militaries and governments for surveillance and defense purposes. Four of the US government’s major defense contractors use Palantir software. Palantir Technologies Inc (NASDAQ:PLTR)’s commercial business growth has risen over the past few quarters due to the adoption of its AI platform (AIP). It is also looking to diversify its business and form partnerships with other countries beyond the US.
Legacy Ridge Capital Management stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its fourth quarter 2025 investor letter:
“At the very least, recent performance for the broader indices is long in the tooth. Most valuations are stretched and some are just bat*hit crazy. We had similar sentiments back in 2019 and wrote about it. Back then the posterchild of the speculative mania was Tesla (TSLA). Now there are dozens of candidates, including TSLA still, but Palantir Technologies Inc. (NASDAQ:PLTR) may be in the pole position. We admit we don’t completely understand what the company does, but it seems super cool. What we do understand is basic arithmetic, and when the CEO goes on CNBC and passionately attacks short sellers, who are just betting the stock is expensive, and he says, “pick something that is not doing a noble task”, not once mentioning valuation during the 10-minute interview, the hair on our neck stands up. We don’t short (we don’t particularly like that math either), but the implied math around Palantir’s valuation is concerning.
PLTR has an enterprise value (EV) of $400B and is expected to have generated $2B of free cash flow (FCF) in 2025. If one assumes that the business grows by its historical topline rate of 30%, buying the whole business today would mean that you wouldn’t see a return of your capital, let alone a return on your capital, for at least 15 years! But once you factor in a discount rate of say 10%, the investor’s payback period moves to 23 years (that’s ~$650B of FCF in year 23—the B is for Billions—but the discounted value is only ~$72B). One could also argue that as a software company, the odds of attaining that level of cash generation appear very steep. Even for a company as ubiquitous as Microsoft, FCF has never exceeded $75B…” (Click here to read the full text)
4. Coinbase Inc (NASDAQ:COIN)
ARK’s Stake Value: $574.8 Million
Cathie Wood has reduced her exposure to Coinbase Inc (NASDAQ:COIN) over the past several quarters, but the crypto company remains among the top holdings of the hedge fund manager. ARK owns a $574.8 million stake in the company as of the end of Q4.
Coinbase Inc (NASDAQ:COIN) shares are down about 17% so far this year amid extreme volatility and uncertainty the crypto industry is facing. However, some believe it’s an attractive entry point for investors willing to stomach risks. Coinbase Inc (NASDAQ:COIN) is moving away from trading fees and trying to increase its subscription revenue and diversify. In Q4, its subscription and services revenue rose 13% year over year and accounted for about 43% of the total sales. Non‑trading revenue has increased fivefold in the past five years. Coinbase Inc (NASDAQ:COIN) can also benefit from a potential shift to equities, stablecoins and prediction markets.
Patient Opportunity Equity Strategy stated the following regarding Coinbase Global, Inc. (NASDAQ:COIN) in its fourth quarter 2025 investor letter:
“Coinbase Global, Inc. (NASDAQ:COIN was a top detractor during the quarter as crypto-related equities followed digital asset prices lower. While price action weighed on results this quarter, we view the move as largely cyclical. Over the long term, we continue to believe Coinbase is evolving beyond a pure crypto trading venue into a broader, scaled financial exchange. As the platform expands into adjacent products including their own layer-2 blockchain known as Base, equity trading, ETF trading, stable coins and prediction markets, we believe Coinbase is positioning itself as a one-stop destination for a new generation of traders and investors. Coupled with the continued maturation of the digital asset ecosystem, increasing institutional participation, and broader adoption, we see this expanding product set supporting greater engagement, diversification of revenues, and attractive long-term earnings power as activity normalizes.”
3. Roku Inc (NASDAQ:ROKU)
ARK’s Stake Value: $638.1 Million
ARK cut its stake in streaming technology company Roku Inc (NASDAQ:ROKU) by 20% in the fourth quarter, but still ended the period with a $640.5 million position. The stock is up 35% over the past 12 months.
Insider Monkey’s database shows that the number of hedge funds having a stake in ROKU jumped by 20 in the fourth quarter as compared to the September quarter. Why is smart money interested in Roku Inc (NASDAQ:ROKU)?
Roku Inc (NASDAQ:ROKU) is seeing strong platform revenue gains amid growth in higher monetization through subscriptions and price increases. It’s focusing on high-margin platform revenue instead of low-margin hardware. Analysts believe secular growth catalysts for the stock include connected TV advertising, international streaming expansion and higher fill rates in ads.
After Roku’s (NASDAQ:ROKU) strong Q4 results last month, Morgan Stanley said the company’s investments in retail partnerships and technology, and said longer TV lifecycles could help the company in the CTV market.
2. Shopify Inc (NASDAQ:SHOP)
ARK’s Stake Value: $640.5 Million
E-commerce platform company Shopify Inc (NASDAQ:SHOP) ranks second on the list of the best stocks to buy for 2026 according to Cathie Wood. ARK has a $640.5 million stake in the company, down 18% from the previous quarter. A total of 101 funds in Insider Monkey’s database had stakes in Shopify Inc (NASDAQ:SHOP) as of the end of the December quarter, up from 91 funds in the previous quarter.
Shopify Inc (NASDAQ:SHOP) is pivoting to AI quickly with AI-powered storefronts and integrations to boost efficiency and engagement. In the fourth quarter, its gross merchandise value jumped 31% year over year despite a weak consumer environment. For Q1, Shopify Inc (NASDAQ:SHOP) expects over 30% revenue growth. SHOP bulls believe the company stands to benefit from the rise of agentic commerce, as the demand for AI-powered ecommerce solutions would increase in the future.
Patient Opportunity Equity Strategy stated the following regarding Shopify Inc. (NASDAQ:SHOP) in its fourth quarter 2025 investor letter:
“Shopify Inc. (NASDAQ:SHOP) is a cloud-based software provider for multi-channel commerce. Shares rose 8.3% in the fourth quarter, finishing 2025 up 51.1% on strong financial results that outperformed Street expectations. The company is demonstrating rapid growth at scale with gross merchandise value (GMV) and revenues each growing over 30% year-on-year. Business fundamentals are strong across geographies, customer types, verticals, channels, and commerce categories. In the third quarter, Shopify grew international GMV by 41%, offline by 31%, and B2B by 98% (all year-over-year). They signed Estee Lauder for Shopify Plus, a significant win for their enterprise strategy, which provides further evidence of the scalability of their platform. The company continues to make progress on its vertical total addressable market (TAM) expansion as well by deepening the solutions it offers merchants including ongoing success with their accelerated checkout (Shop Pay), growing adoption of Shopify payments, expansion of Shopify Capital, and other newer solutions such as their advertising solution, Shopify Campaigns, which is off to a strong start, with a 9 times increase in budget commitments from merchants year-over year. Shopify has also emerged as a leading enabler in the nascent AI-commerce category (shopping within Large Language Models (LLMs) chat-bots such as ChatGPT). We continue to own the stock and believe Shopify is a rare platform business that has many call options on future growth verticals, as the company’s culture and merchant obsession drives rapid product innovation, helping sustain growth for years to come.”
1. Tesla Inc (NASDAQ:TSLA)
ARK’s Stake Value: $1,310.7 Million
Cathie Wood has long been a believer in Tesla Inc (NASDAQ:TSLA) and remains bullish on the company for the long term despite the EV maker facing demand challenges and tough competition. Wood has a $2,600 price target for Tesla Inc (NASDAQ:TSLA) for 2029. In a recent YouTube interview with “The Rundown,” Wood said most of Tesla’s upside potential comes from robotaxis. She mentioned Elon Musk’s recent claim that Tesla Inc (NASDAQ:TSLA)’s robo-taxis will be able to operate in 25% to 50% of major US cities by the end of the year, scaling faster than Waymo.
Most of Tesla Inc (NASDAQ:TSLA)’s bull cases are linked to the company’s future plans for autonomous driving and robotics. But its EV business is facing tough competition and demand headwinds. In 2025, Tesla Inc (NASDAQ:TSLA)’s EV deliveries fell for the second straight year, and the company has lost its crown as the world’s top EV maker by annual deliveries to China’s BYD. The stock is down 11% so far this year.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its fourth quarter 2025 investor letter:
“In 2025, we exited 30.5% of our position in Tesla, Inc. (NASDAQ:TSLA). We are extremely confident in the company’s prospects and ability to become a significantly more valuable business. The Fund completed its purchase of Tesla shares in 2016 with an ending portfolio weight of 9.6% of total investments. Its average cost of all purchases in the Fund was only $14.22 per share. Due to significant appreciation in the stock, the position increased to 26.7% of the portfolio’s total investments at the end of 2025. Despite offsetting some of the volatility caused by the position’s weight with more stable and uncorrelated investments, Tesla’s stock movements caused increased variability in the entire portfolio. We entered into agreements with a large investment bank to dispose of a portion of the holdings through a redemption in-kind because, we believe, it would have minimal impact on the share price and low transaction costs. Tesla remains a top holding of the Fund. The disposition was a portfolio construction decision and not reflective of reduced confidence in the business.”
While we acknowledge the potential of TSLA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TSLA and that has 100x upside potential, check out our report about the cheapest AI stock.
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