There are traditional growth stocks, and then there are disruptive, innovative growth stocks — the latter of which are being made famous by exchange traded funds such as the ARK Innovation ETF (NYSEArca: ARKK).

While there’s no denying that traditional growth stocks, namely the likes of Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), and Facebook (NASDAQ:FB), have undoubtedly served investors well, Cathie Wood, founder and CEO of ARK Investment Management, believes that some mega-cap growth stocks are at risk of disruption and could leave investors disappointed in the years ahead.

“I think the years ahead are going to be so confusing because of this dynamic of disruptive innovation and creative destruction which is not isolated to value stocks,” said Wood at the Morningstar Investment Conference on Wednesday. “There are so-called growth stocks out there that are going to be in harms way.”

Wood did not make bearish comments on Apple, Amazon, Alphabet, or Facebook, and some ARK exchange traded funds hold or have previously held those names. The famed ARKK, however, does not. True to its disruptive objective, the actively managed fund owns shares of, well, disruptors. Those include Roku (NASDAQ:ROKU), Coinbase (NASDAQ:COIN), Square (NYSE:SQ), and DraftKings (NASDAQ:DKNG), among others.

“The other side of [disruptive innovation]  is creative destruction means that these companies that have leveraged up buyback shares, pay dividends and satisfy short-term oriented shareholders — which is what the tech and telecom and financial crisis caused — that those companies are going to be in a bad way and to service their debt, they’ll have to sell their increasingly obsolete products at lower prices,” Wood said.

While some mega-cap tech companies have the cash to easily support dividends — Apple and Microsoft being two prime examples — the global financial crisis and the coronavirus bear market are reminders that plenty of companies in other industries are burdened by dividend payments and will cut those payouts when times are tough. None of ARKK’s 48 holdings are dividend payers.

ARKK could be compelling for another reason: deflation. While inflation talk is dominating markets today, Wood sees deflation being the bigger problem going forward.

“This deflationary force is going to develop more momentum and we have deflation associated with each of the five major platforms, DNA sequencing, robotics, energy storage, artificial intelligence and blockchain technology,” said Wood.

ARKK provides exposure to those themes.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.