Transcript
0:00 Hello, and welcome to the October 2026 market update webinar. My name is Dan White, one of Arc's portfolio managers, and I will be moderating today's call. This call was pre-recorded on October 8th, 2026. With that, I will now turn the call over to Arc CEO and CIO, Cathie Wood. Cathie? >> Okay, Dan. Thank you so much, and thank you everyone for joining us. just a little bit of a a market backdrop. It's become a little more volatile to the downside after a period of volatility to the upside.
0:35 and we actually think this is healthy. It's a healthy correction. and I think if you go to In the Know, webinar that I did last week, I'll go into more detail, but just wrote a letter which summarized our our point of view about what's going on, especially with interest rates and inflation. we do believe that Fed Fed Chairman Warsh has focused everyone on PCE inflation. So, it just went from 3.7% on a year-over-year basis to 3.4 after a downward revision. but it's still far away from 2%. So, we do believe that Warsh means business. He wants that inflation rate down to 2% or less, I would say.
1:27 and we think he's going to get there. he's going to get there helped importantly by productivity gains, which we think are beginning to take off. productivity gains are a potent anti-inflationary force, and we believe he'll also be helped by oil prices. As the Iran conflict winds down or plays out, whatever's going to happen here, it's actually accelerating a trend that what was in place during during COVID, during the supply chain problems when oil prices went up to $100 or more.
2:08 There is a renewed shift towards electric vehicles. And and if you look at oil consumption globally, 57% of it is for transportation. If transportation is moving to the grid, oil prices are going to come down. Nearly 60% of its consumption will migrate over time. And I think the latest flare-up in prices has accelerated the trend. Tesla's auto sales were much better than expected, as were other electric vehicle manufacturers sales. So, we do think inflation's going to come down. We think it could go negative. And yes, consider the source. I've said it before. The technology revolution we are in right now is highly deflationary.
3:01 And as AI makes its way into cost structures and new revenue streams, we do think the inflation rate's going to come down considerably. If you look if you break out the inflation implied by TIPS from the nominal Treasury yield, what you'll see is Treasury yields have been going up because of real yields, not because of inflation. And so, inflation expectations have been fairly steady around 2.4% over the next 10 years if we're using the 10-year Treasury yield. But the real yields have gone up dramatically. And we think that is consistent with an economy growth rate is moving up secularly.
3:56 and that is because of technology. So, we go into that quite a bit in the letter. and we we throw out a number, which is actually increasing the more research we do. The number for real GDP growth we have been using in the next 5 years is 7 to 8%. But, as we're extending that forecast, it actually goes higher. Now, I know no one expects that at this moment in time. but, I do think as we go through earning season, you will see many more companies surprising in terms of growth rates. we're seeing it with the hyperscalers. They've turned already significant growth rates around, and they are accelerating. And we're seeing a lot of evidence that the cloud growth rate is accelerating for Amazon back into the 40s. so, it got into the teens, and it has reaccelerated into the 40s. we think that we're going to see a lot more examples of higher growth rates. Now, the other side of this, of course, is you know, if we're in a technology revolution, it will transform the way we work and live and play.
5:13 And that means it will disturb the traditional world order. So, there is going to be a lot of disintermediation, disruption if not destruction. so, tune into In the Know for for more of that, and for a summary of the letter that I just published. So, with that, Dan, back to you. >> All right. Thank you, Kathy. we will now begin the question and answer portion of today's webinar. Questions were received from our clients, distribution partners, and sent to our funds X and Instagram accounts at arc_funds.
5:52 the first question, Cathie, back to you on this performance of the fund. So, this first question says, "In in light of the ARK suite of funds' strong year-to-date performance, some comments have circulated about longer-term results across different time periods. Could you please speak to that and and share kind of how you think about performance over the longer term?" >> Yes, I I got this question at recently at the Robin Hood Summit. and and we filmed a clip or the clip, my answer, which you can find on X. and it has elicited, I would say, Dan, a lot of comments. and what I said was your your question frame framed it in terms of different time periods. There's only one time period that those who are criticizing our performance are focused on, and that is the five-year time period. If you look at and and these numbers now are up to September of September of this year. If you look at year-to-date, three-year, 10-year, and inception-to-date, ARKK, which is our flagship strategy, is in the top 5% tile, roughly. So, it varies around that very slightly. of our category as as Morningstar has categorized us. that five-year period comes after we were up 360% from the low in COVID to February of '21.
7:37 So, think about that. 360% That was too We were even saying at the time, this is not the real world. Hold your powder dry. So, 360% versus that move, yes. our perform our 5-year returns look very bad. but in the context of the history of of Arc, we're very proud of our performance. And so, I would if you're interested, you can hear my more thorough answer or more animated answer, maybe, on X.
8:15 >> Thank you, Cathie. I I think the end point sensitivity is kind of the the you know, main takeaway and how important that is. Clients aren't that's not the real world application of how they're using these in funds, right? They're buying and selling across that volatility as well. so, I think a point in time like that isn't the best example. It's the longer-term stretch of the manager's performance. That's really key. so, we'll move on to this next question here. Nick, some exciting news.
8:45 Arc's funds, the ETFs specifically, have added Kalshi in ARKK, ARKW, and ARKF. Joining OpenAI as private direct-to-cap exposure inside Arc's publicly traded and widely available ETFs. so, the question to you is what makes Kalshi unique? How large can this prediction market kind of world become? And how does Arc think about holding private companies in the public ETF wrapper?
9:21 >> Yeah, it's a it's a great question, and I think you pointed it out in in your in your question, which is, you know, this is the second private name to be introduced into the public funds, the first one being OpenAI. And I think there's a reason for that, which goes back to the idea around prediction markets. If you look at prediction markets, they're probably the second fastest growing category or sector outside of AI. So, you could say AI is probably the fastest growing space right now. Well, if you look at the numbers for prediction markets, it's right up there. I was just looking at the numbers for September as we're starting to get those to come in. September growth for prediction market notional volume has been up 16x. So, it grew from 4.7 billion in September of 2025. It just did for the full month of September around 78 billion in notional volume.
10:13 So, that's really the reason why we wanted to bring one of the premier assets in the prediction market space in Kalshi. And now, why Kalshi? Well, Kalshi over that same time period as the space has gotten significantly more competitive, has actually grown its market share from 60% as of September of last year to now 70%. So, you've introduced Polymarket, Novik, a bunch of other competitors, all of the sports betting platforms launching their own prediction markets, and Kalshi's actually been able to increase their market share. Not only that, but we look at the pace of execution of these fintech companies. It's something we've done for Block, Robinhood, Coinbase.
10:53 This is how we look at the pace of innovation. How much are they able to execute on during a given year? And Kalshi, not only have they been able to hold on to their market share in their core offering around prediction markets, but they've launched perps. They've moved into different categories and done so with success. So, we're really excited to bring Kalshi and this amazing story to the public markets and excited for everyone to check out and learn more about it.
11:20 >> Yeah, and Nick, I'll just add one thing. Kalshi did an offering, and maybe it was this one, as Robinhood was basically shifting to its internally developed prediction market solution or maybe with another partner. And Kalshi didn't even skip a beat. And at one point, I don't I don't know what was Robinhood as a share of Kalshi's volume. >> Yeah, this is actually a great point, Kathy, because Robinhood is an introducing or was an introducing broker to the Kalshi platform. So, they were you know, sourcing demand through their retail platform for Kalshi's prediction markets, underlying markets when Robinhood and Kalshi first launched that partnership. Because of how large Robinhood is with 28 billion you know, funded accounts, that actually grew to almost 70% of all of Kalshi's volume. So, there was concern even at ARK around, you know, what is this relationship over the long term, especially as Robinhood they ended up doing a joint venture with SIG to launch Roth IRA, which is now their own underlying prediction market. And since that time, Kalshi's volume or I should say Robinhood's volume on Kalshi has has fallen from 70% down to high teens. But as you can see from the other stat I just gave, they're still growing significant market share leadership and just on a notional basis. So, they've been able to outgrow Robinhood and bring on more direct users to the Kalshi platform, which is a great sign again of their execution. You can look, they're usually one of the top apps in the App Store.
13:02 So, they're doing phenomenally well. >> Great, thank you, Nick. And and I do want to add to that we Kalshi added to these public ETFs is exciting. We also have Kalshi in the ARK Venture Fund as well. So, clients looking to kind of play this public private area, this innovation area, they have different avenues that they can tackle that. For the next question, we're going to go to Frank. It wouldn't be a market update without AI as a topic. So, Frank, Anthropic is rumored to IPO this year at a valuation that could exceed SpaceX's record just a few months back. what justifies this valuation and how do you compare it with OpenAI's recent rumored valuation?
13:48 >> Sure. Yeah, it does seem like Anthropic is gearing up for an IPO. the reports suggest they may be a public company before Thanksgiving, but things can change of course. they're reportedly targeting a $2 trillion valuation, which would be larger than SpaceX's IPO valuation of of a little over $1.7 trillion. and so so how do you make sense of this, right? I think there's two different two different ways to approach it. you know, starting with how how Arc likes to approach the market, which is the the long-term view and how big is this opportunity for this type of company.
14:29 and you know, as we publish in our in our Big Ideas reports, we believe the revenues generated by AI companies could reach $7 trillion by 2030. that's penetrating a TAM we think that is much bigger than traditional software. It's the the TAM for global knowledge work, which we estimate at $30 trillion plus of of annual wages for knowledge workers. We we don't think these companies will put knowledge workers out of business. We think that we're going they're going to make them superpowered with the agents that companies like Anthropic and OpenAI are deploying into business businesses and increasingly consumers' hands across the world. and you know, of the $7 trillion TAM, the two largest companies today are Anthropic and OpenAI in terms of revenue, and we think these frontier companies will continue to be a very large share of that market into 2030 and beyond. I would say in particular because they own that agent application Claude in Anthropic's case that end users are using and they build the models that go into that product. They are uniquely positioned to integrate the model and the agent together to deliver a differentiated experience and they also have a cost advantage in doing that which we think is positive for sustainable long-term economics of these frontier AI companies. So that's the top-down version. The more near-term bottom-up way to think about the valuation is that Reuters reported that Anthropic reached $65 billion in run rate revenue in August. That's up from $9 billion to start the year. So they're roughly on track to 10x their revenues again year-on-year as they did for the past 2 years. And if you take that $65 billion in run rate revenue and just assume they don't grow at all and that's the revenue they realize over the next 12 months.
16:19 That's 30 times sales relative to a $2 trillion valuation and Palantir, CrowdStrike and Cloudflare are all trading higher than that in the public markets today and that's with high double-digit sales for those companies or I should say high double-digits for Palantir, CrowdStrike and Cloudflare are accelerating but but sub 50% revenue growth. we're talking about Anthropic growing high triple-digits. So the the size and the magnitude of the growth here is just really incredible and and unlike anything we've ever seen before. So I think that really helps to put it in context of why a $2 trillion valuation can make sense. And I know the question mentioned OpenAI which is reportedly looking at raising a $1.4 trillion round and the the latest rumors are that they could be nearing 70 $70 billion of run rate revenue. That would be 20 times sales. So maybe if you if you looked at it compared to public comps and Anthropic maybe that looks like a steal. But there's a lot of, you know, opinions on that and we're happy to, own exposure to both of these companies in the ARK Venture Fund, like you mentioned, Dan.
17:28 >> Great. Thank Thank you, Frank. That helps to, put that into perspective here. Cathie, I'm going to come back to you on performance again. so the first question was kind of the suite of ARK to zero in on one specific fund, ARKG. It's been the the best-performing ETF in our suite this year. it's pulled back in the in the last week. so the question here is, how should investors read this week's move against the year-to-date return? And then, what do you see as some of the key catalysts here for the multi-omic space?
18:01 >> Okay, well, I'll start out and then hand it to Ovid. well, you know, we've been saying for, practically since the beginning of the firm, but especially during the last four to five years, that, this multi-omics revolution is the most profound application of AI. So, dropping the the cost and time to to research, discover, and develop new drugs.
18:32 developing diagnostic tests that are able to diagnose diseases, with blood tests, especially cancer, in stage one or maybe even before stage one. And then, the holy grail, curing disease. Anthropic has become very visible, and and and somewhat more vocal, in this regard. They are start Anthropic is starting to, move into the discovery and development of new drugs. and and it's partnering with companies like Twist and 10X.
19:08 now, many people haven't even heard of these names. We've had these names in our portfolio practically since inception in 2014 because they are the picks and shovels of this of this healthcare revolution and we have many other names like that in the portfolio. This is not going to stop. We have just scratched the surface of biology. The more we learn, the more we realize how little we know and how much more we need to do to transform healthcare from essentially what it is right now, which is sick care. That's probably 80% of the budget, which is nearly 20% of our GDP. So that's sick care.
19:53 We believe that this revolution importantly informed by AI is going to move a lot of those sick care dollars into real healthcare. So I'll hand it over to Ovit to finish this off. >> Thank you. Thank you. Yeah, there are a number of catalysts and and and upcoming sort of developments to look forward to in the space both to close out 2026 and also kind of longer term as as as as as we see some of our thesis play out.
20:25 Actually in the in the back half of 2026 there are a number of company specific catalysts that are pretty important both to the individual companies and also the space. Some of them are kind of platform validating and it's worth touching on them. First CRISPR they're expecting a number of early stage early stage readouts in the back half of the year, but the most important one is probably CTX310, which is an in vivo gene editing platform for improving cardiovascular outcomes and reducing cholesterol. Their phase 1A data showed in a small number of patients a 50% and 55% reduction in LDL cholesterol and triglycerides or fat respectively at 30 days and so we're looking to see the 12-month data to see how durable that effect was by the year end.
21:12 Also in vivo gene editing a company Intellia had great data for their for Lan Vosi which could be the first in in vivo gene editing therapy approved in the US for the treatment of hereditary angioedema. They have a PDUFA date with the FDA in March of 2027 and expect to launch the product commercially you know pending FDA approval and that would be a major milestone as I know the first FDA approved in vivo gene editing therapy.
21:39 And then the third and last one in the biotech space that I'll highlight is AbSci. They showed some early phase one data for ABS1201 for pattern hair hair loss and we're expecting some 13-week proof of concept data by year end and and the 26-week data early next year. And this one's an important read out because it represents an example of their AI drug discovery platform you know creating a molecule that is engineered to have the tap positive properties and then that ultimately playing out in the clinical data. So important both for AbSci as a company as well as the AI drug discovery thesis to have to have a a good proof point there.
22:21 Looking beyond biotech in the multi-omic space in the tool sector there's been some interest the market has has has had interest in the concept of AI drug discovery and so earnings updates from the tools companies that are supporting that will be pretty important. We'll be looking for things like new customers that are buying buying clinical data or generating clinical data to support the training of of models. Twist announced Entropic as a customer just a couple weeks ago and so we'll be looking for for more of those.
22:52 Similarly Twist we'll be looking for the revenue contribution that AI is providing for for for companies like Twist and 10X. Twist had $25 million in AI drug discovery orders last year, 50 million this year, and they've signaled that that should at least double again. And from what we're hearing, management isn't refuting that maybe next year's number doesn't start with a one. So, so we'll so so so so love to see the progress that they're making there over the coming months and quarters. And lastly, in in diagnostics, really in oncology diagnostics, we now have two FDA-approved blood-based colorectal screening assays, one from Guardant Health and one from Freenome. And really, that's the that we're just in the early stages of what's going to be really a we think a game-changing evolution of the technology to really move from single cancer screening and single cancer detection to multi-cancer early detection. could be one of the most impactful tools for bending the mortality curve in oncology. Could be as big as you know, what we've seen the the impact of something like smoking. We just had the reduction in smoking has had a massive impact on on cancer mortality, and this could be bigger than that. So, there are a number of technical and regulatory and reimbursement hurdles or milestones that will need to be achieved and engineered through and around in order to get there, but we have a number of companies focused on that.
24:20 And just today even, Natera received breakthrough device designation from the FDA for their multi-cancer early detection test based on data they shared across 12 cancers. So, really exciting. and this won't won't won't play out certainly by the end of the year, but in in terms of major things that are happening in the space, this is one that we continue to look forward to. >> Great. Thank you, Ovid, and thank you, Kathy. we'll move we'll shift gears a bit here to crypto. so, Lorenzo, the ARK Venture Fund is now tokenized through Securitize.
24:53 So, first, what does that mean? And second, it does tokenization change anything for the investors in the Arc Venture Fund? >> Yeah, so I I want to give a bit of background before answering the the question. So, this is still very early. We're we're very excited about the this opportunity. if if you look broadly at at tokenization, it's around like 40 billion market in terms of supply on chain.
25:24 if you take, you know, venture capital, private credit private credit, and and funds essentially, which are are subset of that, it it's 5 billion, and it's basically the the category where where where VX would would fit in. So, it's a very very small market, and it's it's very early. tokenization really Dan, people have to think of it as a ledger technology. I think we've received many many questions in terms of what what does it mean. It's really, you know, it is the same almost the same asset and fund, but really with a different ledger technology, right? And so, if you think in terms of what what people are or entitled to, or what they're holding, if you're holding VX with the normal book entry system, it's exactly the same as the the tokenized version, and you have the the same rights and everything. And so, I think in terms of technology, really people have to think of it as you know, Excel, Google Sheets. It it's really like the the you know, the the the layer technology. It doesn't really change fundamentally the the fund or the asset. I think over time, why why are we doing this? I think and we're very excited, we believe the the technology can enable new use cases, and potentially more more efficient distribution. so, obviously, this this will come out hopefully in the future. Right now, you can subscribe and and and redeem on the Ethereum blockchain. But again, we're very excited very excited as more rule making comes out from from the the SEC and CFTC and other institutions, you know, we're we'll be we'll be we'll look at the other use cases that that make the product better and just and just more efficient.
27:20 >> So, Lorenzo, maybe you can talk a little bit about potential use cases. They're not maybe ready now, but just what we're learning from DeFi. >> Yes. So, I think I I think two use cases that that that are very tangible right now would be to be able to use ARKVX as collateral, right? And so, for example, if you have a position in VX and you want to have some liquidity but without selling your position because you still want to remain long with the with the fund, being able to use VX, for example, in a money in a in a borrow lend platform and take out stable coins, I think is is an interesting use case. the second one, for example, would be potentially a secondary trading market, right? So, VX is redeemable. It has a liquid window quarterly. And so, you can redeem up to 5% of the fund quarterly.
28:29 And so, perhaps having, you know, another venue where you can have liquidity during the quarter would be something also that I think would be useful and and and interesting for for people. But just in general, Kathy, I think being able to own VX in a and you know, in your wallet perhaps with Bitcoin with Ethereum with other assets that you have tokenized gold. I think will greatly improve the the UX and for us even in terms of distribution like potential partners in you know, select jurisdictions that want to plug in will probably be easier than than right now.
29:12 >> Great. Thank you, Lorenzo. For this next question, we're going to go to Tasha for that for our final two I should say. So Tasha, SpaceX the recent launch. So what did SpaceX's latest launch prove from a technical lens? And then how does that potentially change any timelines for Starship's role in launch costs? >> Sure, Dan. so flight 14 was very exciting because this is the first time that Starship went to orbit and actually deployed a commercial payload. They deployed 26 of the V3 SAS. So these SAS have much more bandwidth. It's roughly 1 terabit per second per sat versus 96 gigabits for the V2 mini.
30:02 so you know, in general this is a much much bigger rocket with with more payload. They had 26 SAS on this this mission, but eventually the plan is to fit 60. and again the the important thing to note here is that they they made it to orbit. They were able to you know, de-orbit on purpose let's say in in the future on the on the next mission they plan they they could plan to catch both this ship and the booster.
30:31 They didn't do that on this mission. they've said they would in the past. We'll wait for them to confirm. And so that would be really the the next big milestone on this road to reusability, which is what we think will significantly lower launch costs. So, our estimate is that launch costs are around $1,000 per kilogram now, going to hundreds of dollars per kilogram eventually, $100 per kilogram. but, you know, rapid reusability is really what enables that. so it So, again, on the next mission, if if they do end up catching the the ship or the booster or both, this would be, you know, the next big major milestone. you know, on every mission, they learn more about the heat shield, they get more data.
31:12 they are, you know, learning with each try here. but in in terms of the what makes a difference for cost, it is really that, reusability piece that we're looking for. >> Yeah, and, Tasha, according to some estimates, including our own chief futurist, Brett Winton, at least in early days, each of these Starship, launches, when they're, you know, ready to go, will could deliver what was it, a billi- billion dollars in revenue in in the short term, which is astounding.
31:55 >> Yes, assuming that they're able to hold the current, pricing per bandwidth constant, that it could deliver, you know, at the full capacity at the with 60 satellites, that could be roughly a billion dollars of revenue. Just to just to put it in perspective, for for what, you know, Starship really means to SpaceX. >> Great, thank you. And Tasha, one final question here. We're going to stay in the world of Elon, but it it's honestly more of a question about the world of innovation and in the build out here.
32:22 So, could Terafab evolve beyond the internal use of Tesla and SpaceX and become, a supplier to others like an Nvidia? >> You know, SpaceX and Tesla have really said that this is a project to serve their own needs. In fact, in an interview, Bret Johnson, the CFO of SpaceX, said that they would take every wafer produced here. so, I I think that, you know, it's it's unlikely, at least in the in the short term, that they would consider serving outside customers, but I I would say, with both SpaceX and Tesla, never say never say never here. I mean, certainly a couple years ago, I don't think anyone would have predicted that they'd become a Neo cloud, so, you know, if the chip shortage continues and they see an opportunity, perhaps. but I I would say that is a a number of years away.
33:08 >> Yeah, and I'll just add something there. We had no idea about their Neo cloud business a year ago. so, they've been able to pivot and use use assets brilliantly moving XAI, which is now SpaceX AI, which may now be SpaceX SI, superintelligence. they've been move moved that from, you know, highly unprofitable to highly profitable within 1 year.
33:38 So. >> Yeah, never count Elon out. so, that concludes the question and answers for today's webinar. we'll briefly show performance statistics that can also be found on ark-funds.com. Thank you to everyone who listened to today's call, and as always, thank you to the entire ARK team.
36:14 >> Mhm.