February mARKet Update Webinar Summary

In our February 2026 mARKet Update Webinar, Daniel White, CFA, Associate Portfolio Manager, moderated a wide-ranging discussion on markets, innovation, and the technological convergence reshaping the global economy. For further insights, please view the full webinar here. 

The Market Is Panicked That Ai Will Destroy Software, And That Might Be Just The Start. What’s Your View?

Frank Downing, Director of Research, Next Generation Internet, explained that AI coding agents are dramatically lowering the cost of creating software. Rather than eliminating enterprise software providers overnight, we expect heightened competition. Incumbents must integrate AI deeply into their product stacks, while AI-native companies attack workflows with new architectures and pricing models. The companies that succeed will participate in what we describe as the token supply chain, embedding AI-generated intelligence directly into enterprise processes. Growth is already shifting within the technology stack. Over the last five years, incremental growth has accrued more to infrastructure and platform layers than to applications. We anticipated that shift; what has surprised even us is the speed at which application-layer growth has begun to decelerate in certain segments. We have positioned portfolios accordingly, reducing exposure to business models most vulnerable to AI-driven pricing pressure and increasing exposure to infrastructure, platforms, and AI-native leaders. Importantly, demand for AI compute remains strong. Cloud providers continue to report robust growth in AI workloads.

Is The Spacex Acquisition Of Xai A Positive Heading Into A Potential IPO? And Taking This One Step Further, If Spacex And Tesla Merged, Would It Limit Short-Term Upside Potential For Tesla Shareholders?

Brett Winton, Chief Futurist, addressed this question through the lens of convergence. We believe the combination of SpaceX and xAI is strategically compelling. From SpaceX’s perspective, demand for AI compute—particularly in orbit—creates a substantial opportunity. Launching compute infrastructure into space could reduce cost per kilowatt relative to terrestrial alternatives. By combining with xAI, SpaceX gains not only launch economics but also asymmetric exposure to the intelligence layer built on top of that compute. From xAI’s perspective, secure access to compute is critical. The AI model landscape is increasingly constrained by GPU availability. Vertical integration with SpaceX helps ensure long-term access to the infrastructure required to train and deploy frontier models. Regarding Tesla, we continue to believe Tesla is undervalued relative to its long-term autonomy and RoboTaxi opportunity. While deeper integration among Elon Musk’s companies may make strategic sense over time, we would prefer to see Tesla’s equity more fully reflect its intrinsic value before any merger scenario unfolds. More broadly, this discussion illustrates the Great Convergence we highlighted in Big Ideas 2026: AI, robotics, energy, and space technologies reinforcing one another at an accelerating pace.

Please Provide An Investment Thesis Update For Archer Aviation.

Sam Korus, Director of Research, Autonomous Technology & Robotics, reiterated our conviction in electric vertical takeoff and landing aircraft.

The eVTOL opportunity rests on three core attributes: low cost, safety, and quiet operation. Electric propulsion enables distributed vertiports and offers the potential to reduce short-distance travel times dramatically. Airport commutes that take an hour by car could take minutes by air.

Today, we view the space largely as a two-company race between Archer Aviation and Joby. Archer has made meaningful regulatory progress in the United States and is participating in federal pilot programs. The company also expects to support transportation at the 2028 Los Angeles Olympics, an important commercial milestone. In our view, regulatory engagement and early partnerships are critical steps toward scaled deployment.

Central To ARK’s Research Is Wright’s Law. How Do You Apply This Methodology To Blockchain, Such As Costs Decline In Blockchain, Or Reach Breakthroughs In This Field?

David Puell, Research Trading Analyst/Associate Portfolio Manager, Digital Assets, explained that while blockchain lacks a simple physical unit of production, the core principle of Wright’s Law still applies. As cumulative adoption scales, costs decline. In public blockchains, declining costs manifest in settlement, custody, and intermediation. Over time, we have observed meaningful reductions in the cost of transacting and securing value relative to legacy financial systems. Decentralized finance illustrates the opportunity. Traditional financial services monetize roughly 3% of the global financial asset base. Comparable activities in decentralized systems often occur at materially lower cost. Even modest reductions in transaction fees—from 2–3% to 1% or below—represent significant savings when applied to trillions of dollars in annual volume.

In our view, blockchain networks are following a Wright’s Law-like trajectory. As infrastructure scales and open-source development proliferates, margins compress and user costs decline.

Given That The ARK Funds Are Largely Concentrated In The US, How Do You Evaluate The Global Opportunity Set, Especially Across China And Europe?

Our portfolios are constructed based on research into disruptive innovation, not geographic benchmarks. Geography reflects where innovation clusters and where policy environments support commercialization. Europe faces regulatory headwinds, particularly in AI, which in our view have slowed adoption and innovation. China has directed national focus toward what it calls new productive forces, accelerating investment in AI and related technologies. By many assessments, China trails the United States by only months in certain frontier AI capabilities. Even so, we maintain limited exposure to China. Over the past five years, regulatory unpredictability from sector crackdowns to policy shifts has complicated long-term capital allocation decisions. In contrast, the United States appears to be shifting toward deregulation and a more capital-friendly stance. We believe this environment enhances expected returns on invested capital for innovative companies.

How Does ARK Think About The Silicon Photonics Space From A Technology And Value Chain Perspective, And Are You Currently Evaluating Potential Investments There?

Frank Downing discussed silicon photonics as a critical enabler of AI scaling. By transmitting data using light instead of electricity, silicon photonics can increase bandwidth and reduce latency in data center networking. As AI models grow and inference workloads expand, copper interconnects will likely encounter performance bottlenecks. Silicon photonics, particularly co-packaged optics integrated directly with chips, offers a path forward. We have invested in this theme through our venture strategy, including Ayar Labs, which develops co-packaged optical solutions. We believe advances in networking infrastructure will play a foundational role in enabling next-generation AI performance.

How Has Your View On Quantum Computing Evolved, And How Do You Assess China’s Progress In The Space?

Jozef Soja, Research Analyst, Next Generation Internet, emphasized that quantum computing remains promising but long-dated. Progress in qubits and error reduction continues; however, broadly disruptive capabilities likely remain 15–20 years away.

Even under accelerated scenarios, timelines for breaking widely used encryption standards extend well into the 2040s or beyond. By contrast, AI-driven productivity gains are occurring today. Accordingly, we prioritize AI-related opportunities in our public market strategies.

While certain Chinese firms maintain quantum research initiatives, capital allocation trends suggest that AI has become the dominant focus. We will continue to monitor quantum developments, particularly as they relate to cybersecurity and blockchain, but we do not view quantum risk as imminent.

Conclusion

Across each question, a consistent theme emerged: technological convergence is accelerating, cost curves are declining, and productivity gains are surfacing. Markets may respond to disruption with volatility, but in our view, innovation defines long-term value creation. At ARK, we remain disciplined, research-driven, and forward-looking as we invest in the technologies shaping the future.

Make sure to check out our In The Know video series for deeper insights about inflation, innovation, and macroeconomic developments.

Important Information

Investors should carefully consider the investment objectives and risks as well as charges and expenses of an ARK Fund before investing. This and other information are contained in the ARK Funds’ prospectuses and summary prospectuses, which may be obtained by clicking here. The prospectus and summary prospectus should be read carefully before investing. 

An investment in an ARK Fund is subject to risks and you can lose money on your investment in an ARK Fund. There can be no assurance that the ARK Funds will achieve their investment objectives. The ARK Funds’ portfolios are more volatile than broad market averages. The ARK Funds also have specific risks, which are described in their respective prospectuses. 

The ARK DIET Buffer ETFs have characteristics unlike traditional investment products and are not suitable for all investors.

The information provided in this material is for informational purposes only and should not be used as the basis for any investment decision and is subject to change without notice. It does not constitute, either explicitly or implicitly, any provision of services or products by ARK, and investors should determine for themselves whether a particular investment management service is suitable for their investment needs. All statements made regarding companies or securities are strictly beliefs and points of view held by ARK and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or hold any security. Historical results are not indications of future results.

Certain of the statements contained in this material may be statements of future expectations and other forward-looking statements that are based on ARK's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. ARK assumes no obligation to update any forward-looking information. ARK and its clients as well as its related persons may (but do not necessarily) have financial interests in securities or issuers that are discussed. Certain information was obtained from sources that ARK believes to be reliable; however, ARK does not guarantee the accuracy or completeness of any information obtained from any third party.

Digital assets, often referred to as cryptocurrencies, such as bitcoin and ether are relatively new investments, which have unique and substantial risks and which may be more volatile than other types of investments. ARK strongly encourages any investor considering an investment in any digital asset to consult with a financial professional before investing. All statements made regarding digital assets are strictly beliefs and points of view held by ARK and are not recommendations by ARK to buy, sell or hold any digital asset. Historical results are not indications of future results.

To view the top ten holdings for ARKK click here.

To view the top ten holdings for ARKQ click here.

To view the top ten holdings for ARKW click here.

To view the top ten holdings for ARKG click here.

To view the top ten holdings for ARKF click here.

To view the top ten holdings for ARKX click here.

To view the top ten holdings for ARKVX click here.

Holdings are subject to change

Foreside Fund Services, LLC, distributor.