TLDR
- Cathie Wood predicts the U.S. economy and stock market will experience strong growth over the next three years, comparing it to “Reaganomics on steroids”
- Her Ark Innovation ETF returned 35.49% in 2025, beating the S&P 500’s 17.88% return for the same period
- Wood rejects AI bubble concerns and expects increased capital spending in AI, robotics, energy storage, blockchain, and biotechnology
- She believes falling interest rates, tax cuts, and deregulation under the Trump administration will support tech investments and boost GDP growth to 6-8% annually
- Despite recent success, the Ark Innovation ETF has a five-year annualized return of -10.31% compared to the S&P 500’s 14.66%
Cathie Wood, CEO of ARK Invest, released her 2026 market outlook on January 15. She predicts strong gains for U.S. stocks over the next three years. Wood compared the current environment to the Reagan era of the 1980s.
In her outlook letter, Wood described the U.S. economy as a “coiled spring” ready to rebound. She said the economy has suffered a rolling recession despite sustained GDP growth over the past three years. High interest rates after Covid squeezed sectors including housing, manufacturing, and non-AI investment.
Wood expects easing interest rates and rising productivity to release this pent-up growth potential. She wrote on X that the next three years could resemble “Reaganomics on steroids.” This could lead to another golden age for the U.S. stock market, according to Wood.
The ARK Invest founder pointed to Trump administration policies as key drivers. She said these policies echo the early days of Reaganomics in the 1980s. During the Reagan era, deregulation, tax cuts, sound monetary policy, and a strong dollar helped launch a multi-decade bull market.
Wood projects nominal U.S. GDP growth could accelerate to 6% to 8% annually in coming years. She attributes this outlook to falling interest rates, tax cuts, and deregulation. She believes these factors will support investments in technology that drive growth for American businesses.
ARK Innovation ETF Performance and Holdings
The flagship ARK Innovation ETF delivered a 35.49% return in 2025. This far outpaced the S&P 500’s return of 17.88% during the same period. Wood gained fame after the fund delivered a 153% return in 2020.
The fund focuses on emerging technology companies in sectors including AI, blockchain, biomedical technology, and robotics. As of January 16, 2026, the top holdings include Tesla at 10.14%, CRISPR Therapeutics at 5.29%, and Roku at 5.09%. Other major positions include Coinbase Global, Tempus AI, Shopify, Robinhood Markets, Beam Therapeutics, Palantir Technologies, and Roblox.
Wood’s investment approach delivers strong returns in bull markets but faces steep losses in downturns. The ARK Innovation ETF dropped more than 60% in 2022. These swings have hurt long-term performance.
As of January 16, the fund has a five-year annualized return of -10.31%. The S&P 500 returned 14.66% over the same period, according to Morningstar data. A Morningstar analysis found the ARK Innovation ETF destroyed $7 billion in investor wealth from 2014 to 2024, making it the third-biggest wealth destroyer among mutual funds and ETFs.
AI Spending and Technology Outlook
Wood dismissed concerns about an AI bubble in her 2026 outlook. She said the bubble “is years away” and predicted “the most powerful capital spending cycle in history” is coming. Wood noted that what was once a cap on spending has become a floor as AI, robotics, energy storage, blockchain, and genomic sequencing platforms mature.
She said consumers are adopting AI at twice the pace they adopted the internet in the 1990s. Wood expects 2026 to bring better user experiences, including applications like ChatGPT Health. She wrote that this year should see steps forward through user experiences that are more intentional, intuitive, and integrated.
Wood also discussed Bitcoin and gold in her outlook. Gold surged 65% in 2025 while Bitcoin fell 6%. Wood highlighted Bitcoin’s role as a portfolio diversifier, noting its correlation with gold is lower than the correlation between the S&P 500 and bonds.
She said Bitcoin should provide good diversification for asset allocators seeking higher returns per unit of risk. Wood expects developments in AI, robotics, energy storage, blockchain, and biological technology to push productivity growth to sustainable new highs and generate wealth creation. Her outlook was more bullish than many Wall Street analysts, who expect more modest S&P 500 gains in 2026.
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