Is the ARK Innovation ETF Finding a Floor? Tesla and Robinhood Set the Tone

Cathie Wood, the founder and CEO of Ark Invest, is no stranger to the implied volatility that is commonplace in the tech sector. Her firm and its flagship exchange-traded fund (ETF) focus on companies known for their disruptive innovation. 

But with tech stocks selling off late last year and well into 2026—and the sector in the red this year with a more than 4% loss—confidence in the ARK Innovation ETF (BATS: ARKK) could be waning.

The fund, which has gained close to 50% over the past year, has now lost nearly 9% year-to-date (YTD) and is down around 45% over the past five years, including a loss of roughly 55% from its all-time high on Feb. 12, 2021. 

However, given the extent of this year’s flight to safety and tech’s simultaneous sell-off, Wood’s ARKK ETF could be nearing a bottom, which would position the fund to be a bounce-back candidate for the remaining three quarters of 2026. 

ARKK’s Big-Name Holdings Have Had Big-Time Corrections

Wood is famously bullish on Elon Musk-led Tesla (NASDAQ: TSLA).

In fact, the Magnificent Seven electric vehicle (EV) maker is ARKK’s top holding, with a weighting of 10.35%, or nearly 1.686 million shares. For context, no other holding is weighted higher than 6.28%. 

But Tesla’s beta of 1.89 tells investors everything they need to know. The stock is nearly 2x more volatile than the broad market, and holding it—or funds like ARKK that have Tesla positioned near the top—is going to introduce that tech-sector volatility to your portfolio. That has been on display this year, as TSLA has slipped more than 13% YTD.

It’s a similar story for popular retail trading platform Robinhood (NASDAQ: HOOD), which gained more than 346% from its one-year low on April 8, 2025, to the stock’s all-time high on Oct. 9, 2025. Since then, shares of HOOD are down nearly 52%, including a YTD loss of more than 36%.  

But analysts expect good things from Robinhood going forward, fueled by gross margins of nearly 98% for the past three years, strong year-over-year (YOY) revenue growth and a recent foray into prediction markets, which should boost top-line numbers in 2026.

Despite those aforementioned losses—and perhaps in part due to them—analysts have given HOOD a consensus price target of $120.59, implying more than 64% potential upside from where shares are trading today. That bodes well for ARKK, as Robinhood is the fund’s seventh-largest holding with a weighting of 4.48%, or nearly 3.711 million shares. 

Meanwhile, other top holdings, including Advanced Micro Devices (NASDAQ: AMD)—one of the world’s largest designers and manufacturers of semiconductors—smart TV maker Roku (NASDAQ: ROKU), centralized crypto exchange Coinbase (NASDAQ: COIN), and Shopify (NASDAQ: SHOP) have seen YTD losses of 10.75%, 12.89%, 17.44%, and 22.49%, respectively. 

Each of those six stocks—which in total account for nearly one-third of the ARKK’s holdings—has suffered alongside the tech sector this year and has plenty of room to run in the short and medium terms.

Add to that list Palantir (NASDAQ: PLTR), Roblox (NYSE: RBLX), Amazon (NASDAQ: AMZN), CoreWeave (NASDAQ: CRWV), and NVIDIA (NASDAQ: NVDA), and ARKK holds the recipe for enormous share appreciation once the tech sector bottoms and reverses.  

Factors That Could Keep the ARKK Down

Despite the ETF receiving an aggregate rating of Moderate Buy based on 1,286 analyst ratings covering 50 companies of the fund’s holdings, there are reasons for investors to be cautious. 

Institutional buying outnumbered selling in the first three quarters of last year. But as tech’s woes took root in Q4 2025, outflows of $340 million exceeded inflows of $327 million, marking the first time that selling surpassed buying since Q4 2024.

Another warning sign comes directly from the tech sector itself. This year, the cohort ranks seventh among the S&P 500’s sectors, while the energy sector leads the index. The last time energy led the market was in 2022 during the last bear market. That year, tech stocks posted a loss of more than 28%. 

To quote Mark Twain, “History doesn’t repeat itself, but it often rhymes.” Energy’s lead this year, alongside tech’s underperformance, does not necessarily portend an inevitable bear market. However, it does warrant caution. While tech stocks—and shares of SaaS companies in particular—have been punished in 2026, that does not mean their bottom is imminent. 

Ongoing geopolitical unrest, increased market uncertainty, and the continued weakening of the U.S. labor market and U.S. dollar are sustaining the market’s rotation into defensive, cyclical, and safe-haven assets. 

However, when tech’s bottom is in, ARKK investors are likely to see outsized gains as the leading names in industries from microchips and e-commerce to crypto and cloud storage are likely to undergo healthy recoveries. 

Before you make your next trade, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now…
See The Five Stocks Here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.