ARK Invest CEO Cathie Wood recently stated that she did not participate in Arm’s initial public offering (IPO) because she believes the British chip designer was overvalued compared to its competitors.

Arm, a company based in Cambridge and controlled by Japanese investment giant SoftBank, went public on the Nasdaq exchange. Its IPO price was $51 per share, valuing the company at nearly $60 billion. However, the stock’s performance has been lackluster since then, with shares closing at $55.17 on Tuesday.

Speaking on HaberTusba’s “Squawk Box Europe,” Wood emphasized the importance of innovation in the AI sector but expressed concerns about the excessive focus on AI in Arm’s valuation. She believes that the competitive dynamics in the industry should be given more attention.

Wood explained that her investment firm did not participate in Arm’s IPO due to its high valuation, considering other stocks in their portfolios with lower prices and greater AI exposure.

Arm declined to comment on Wood’s remarks.

Wood’s flagship ARK Innovation ETF includes top holdings such as Tesla, Shopify, UiPath, Unity, Zoom, Twilio, Coinbase, Roku, Block, and DraftKings.

After facing challenges during the recent period of interest rate hikes, the ARK ETF has experienced a resurgence this year, driven by investors’ interest in AI-related stocks. Wood anticipates that this trend will continue as interest rates stabilize.

Positive Outlook for Innovation and Global Megatrend Strategies

Wood believes that with declining inflation and central banks scaling back their aggressive monetary policies, the future presents a favorable environment for innovation and global megatrend strategies.

ARK Invest Expands into European Market

On Wednesday, ARK Invest acquired British thematic ETF issuer Rize ETF for £5.25 million ($6.5 million). This marked the company’s first foray into the European passive investment market.

Wood highlighted the lack of access for European investors to ARK’s U.S.-based ETFs, despite significant demand for the company’s research in Europe. She stated that technology costs, particularly in AI, are decreasing, making it easier for tech companies to thrive globally.

Wood emphasized a global perspective and expressed openness to the flourishing of technologies worldwide, including in Europe.