Cathie Wood is the CEO and chief investment officer of Ark Invest. Over the last several years, she has earned a reputation for making overly bullish calls on companies that may typically lack the full attention of the rest of Wall Street.
Another aspect of Wood's investment prowess that is quite uncommon is that she has Ark publish its trading activity on a daily basis. With this in mind, it's never a question of what stocks Wood is buying or selling, but why she may be doing so.
Toward the end of last year, I started noticing some frequent purchases of GitLab (GTLB +4.09%) from Ark's daily trading reports. If you're unaware of GitLab, fear not!
Below, I'm going to break down Wood's trading activity in GitLab stock and make the case for why this under-the-radar artificial intelligence (AI) player is worth keeping on your radar.
NASDAQ: GTLB
Key Data Points
Cathie Wood can't get enough of GitLab
In the table below, I've outlined Ark's buying activity in GitLab over the past several weeks:
| Date | Shares Purchased |
|---|---|
| Dec. 23 | 78,185 |
| Dec. 24 | 269,976 |
| Dec. 31 | 245,243 |
| Jan. 6 | 290,710 |
| Jan. 7 | 162,121 |
Data source: Ark Invest.
Since the end of December, Wood has purchased slightly more than 1 million shares of GitLab and spread the position across two of Ark's exchange-traded funds (ETFs): ARK Innovation ETF and ARK Next Generation Internet ETF.
Image source: Getty Images.
Why GitLab could be a great AI opportunity
GitLab is a software platform that helps developers code, identify security vulnerabilities, and automate testing all in one platform.
Image source: GitLab.
The company's AI platform, GitLab Duo, is integrated with Amazon Q -- an agentic AI chatbot. During GitLab's third-quarter earnings call in early December, management noted that "the next evolution in AI will be agentic" and "agentic AI is the foundation of GitLab Duo workflow."
I do not see the collaboration with Amazon as coincidental. Microsoft's CoPilot is one of the largest agentic AI systems available right now, and a big part of its success can be traced back to GitHub. Remember, GitHub is perhaps the most direct competitor to GitLab, and became a part of Microsoft's ecosystem after it was acquired for more than $7 billion back in 2018.
Should you follow Wood's lead and buy GitLab stock right now?
In 2024, shares of GitLab declined by roughly 10%. Considering AI fueled the S&P 500 and Nasdaq Composite to new highs on numerous occasions last year, it's actually surprising to find a technology stock that underperformed the broader market.
In the table below, I've illustrated GitLab's price action between the dates that coincide with Ark's purchases. Given the brief sell-off toward the end of the year, it appears that Wood took advantage of the depressed price action and bought the dip.
Considering GitLab's top line is growing at more than 30% annually and the company has recently transitioned from a cash-burning operation to generating positive net income, I tend to think the underperformance in the stock boils down to a couple of factors such as competition and high expectations from investors.
While it remains much smaller than Microsoft's GitHub, I wouldn't discount GitLab's potential. Considering the company is partnering with Amazon and specifically focusing on agentic AI, I personally think GitLab is subtly positioned for much higher revenue and profit growth.
I think GitLab could be an interesting opportunity for investors looking for potentially high-growth, albeit volatile, names in the AI realm.
