ARK Invest's Cathie Wood is pushing back hard against AI bubble fears, but she's not dismissing correction risks entirely. Speaking at Saudi Arabia's Future Investment Initiative, the high-profile investor warned that rising interest rates could trigger a market "reality check" even as she doubled down on AI's long-term potential.
The AI bubble debate just got a major contrarian voice. ARK Invest CEO Cathie Wood is firmly pushing back against mounting concerns that artificial intelligence valuations have spiraled out of control, but she's not blind to correction risks ahead.
Speaking to CNBC at Saudi Arabia's Future Investment Initiative in Riyadh, Wood delivered a nuanced take that's already rippling through investment circles. "I do not believe AI is in a bubble," she stated flatly, even as she warned of a coming "reality check" that could shake markets.
The timing couldn't be more critical. Global stock markets just hit fresh records this week, with investors riding high on hopes for a U.S.-China trade deal breakthrough. But Wood sees choppy waters ahead as the Federal Reserve's interest rate narrative shifts.
"We are going to reach a moment in the next year where the conversation will shift from lower interest rates to rising rates," Wood told CNBC's Dan Murphy. "There will be a shudder in markets."
Wood's warning directly challenges a core assumption many investors hold about innovation stocks. "There are a lot of people out there who think that innovation and interest rates are inversely correlated. That is not true over history," she explained. But she acknowledges market algorithms don't always follow historical logic.
"The way algorithms work these days, we think there will be a reality check, shall we say," Wood added, hinting at the automated trading systems that amplify market moves in both directions.
Her comments land amid an increasingly crowded field of bubble warnings. Just this month, the International Monetary Fund and Bank of England joined the chorus of institutions flagging AI market risks. IMF chief Kristalina Georgieva's blunt advice to investors: "Buckle up: uncertainty is the new normal."
That puts Wood at odds with some major financial voices. OpenAI's Sam Altman, JPMorgan's Jamie Dimon, and even Federal Reserve Chair Jerome Powell have all raised correction concerns as AI spending hits record levels.
But Wood isn't backing down from her long-term AI thesis. She argues current Big Tech valuations will make perfect sense once enterprise transformation really kicks in. "If our expectations for AI, especially embodied AI, are correct, we are at the very beginning of a technology revolution," she said.
