Cathie Wood Says Software Is the Next Big AI Opportunity — 1 Spectacular Stock You’ll Regret Not Buying if She’s Right

Cathie Wood is the head of Ark Investment Management, which operates a family of exchange-traded funds (ETFs) focused on innovative technology stocks. Last year, Wood said software companies could be the next big opportunity in the artificial intelligence (AI) industry. She predicts they will eventually generate $8 in revenue for every $1 they spend on AI data center chips from suppliers like Nvidia.

And Wood has put her money where her mouth is. Since making that call, she has piled into AI software companies like xAI, Anthropic, and OpenAI through the private Ark Venture Fund. Plus, Ark’s ETFs hold several AI software stocks, including Tesla, Palantir, Meta Platforms, and Microsoft.

If Wood is ultimately right about AI software companies, here’s why Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) could be among the biggest winners.

But there is one glaring problem, and it has nothing to do with the company’s growth or its position as an AI powerhouse.

The U.S. Department of Justice (DOJ) filed an antitrust lawsuit against Alphabet in 2020, alleging the company engaged in monopolistic practices by paying Apple as much as $20 billion a year to make Google the default search engine on its devices. Unfortunately for Alphabet, the judge in the case handed down a decision last month and sided with the DOJ.

It’s unclear what the consequences will be. Alphabet might have to pay a financial penalty, or the government could force a breakup of the entire company. The latter would create significant uncertainty for investors because Alphabet would likely have to sell certain parts of its business to satisfy the DOJ that it won’t engage in anti-competitive behavior in the future.

Many Wall Street analysts say a breakup would be an extreme and unlikely outcome. Technology analyst Dan Ives of Wedbush Securities thinks Alphabet will reach a settlement with the DOJ within the next 18 months to bring the matter to a close. That could involve a financial penalty and some changes to how Alphabet structures deals with its partners.

Absent a settlement, it could take years to reach a final resolution while Alphabet appeals the judge’s decision, so the status-quo should prevail for now. Therefore, Alphabet stock looks like a great value at the current price, and if the company does emerge from this regulatory situation intact, it could look like an absolute bargain, considering Cathie Wood’s AI software forecast.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Cathie Wood Says Software Is the Next Big AI Opportunity — 1 Spectacular Stock You’ll Regret Not Buying if She’s Right was originally published by The Motley Fool