Cathie Wood Is Betting Big on This Hidden-Gem AI Stock
While Big Tech companies such as Nvidia (NVDA) and Microsoft (MSFT) are dominating the artificial intelligence narrative, several other high-potential stocks are flying under the radar in 2025. Noted Wall Street investor Cathie Wood is bullish on one such AI stock, a hidden gem.
Valued at a market cap of $8.7 billion, GitLab (GTLB) provides a comprehensive DevSecOps platform that manages the entire software development lifecycle from planning to deployment. This single platform enables organizations to develop, secure, and deploy software across cloud environments while offering features for project management, source code control, security testing, deployment, monitoring, and analytics.
In May 2025, Cathie Wood's ARK Invest has so far purchased close to $18 million worth of GTLB stock. Let's see why Wood is betting big on this AI stock.
Is This AI Stock a Good Buy Right Now?
GitLab went public in late 2021 and currently trades 60% below its all-time highs allowing you to buy the dip. In Q4 of fiscal 2025 (ended in January) GitLab reported revenue of $211.4 million, an increase of 29% year over year, while sales in fiscal 2025 rose by 31% to $759 million. Notably, GitLab significantly improved profitability with an adjusted operating margin of 18% in Q4, a 960-basis-point improvement year-over-year.
Newly appointed CEO Bill Staples, who brings nearly 30 years of experience in developer tools and platforms from companies like Microsoft (MSFT) and New Relic, outlined three key objectives for fiscal 2026. These include winning new customers, delivering value faster, and focusing on customer-centered innovation.
Staples emphasized that while GitLab has grown rapidly, the strategy going forward centers on fundamentals: acquiring more new customers, especially in mid-market and enterprise segments, improving customer experience, and accelerating innovation in core DevOps, security, and AI areas.
GitLab's platform strategy continues to gain traction with Ultimate, its premium offering, now accounting for 50% of total ARR (annual recurring revenue). This milestone underscores the company's success in delivering comprehensive DevSecOps capabilities, with security and compliance driving customer adoption. GitLab Dedicated, its single-tenant SaaS (software-as-a-service) offering, grew approximately 90% year-over-year, reflecting strong demand from enterprises seeking cloud benefits and security controls.
GitLab is strategically positioned to capitalize on the AI transformation wave with its GitLab Duo suite. Duo Pro provides code suggestions, while Duo Enterprise embeds AI throughout the entire software development lifecycle. In Q4, GitLab announced several significant Duo wins, including Barclays (BCS), CACI (CACI), Capgemini (CAPMF), and NatWest (NWG), demonstrating early customer adoption. GitLab also announced Duo Workflow entering private beta, representing its move from AI-assisted to AI-driven development through autonomous agents that can complete tasks like fixing bugs without human intervention.
GitLab's dollar-based net retention rate remained strong at 123% in Q4, with seat expansion accounting for 75% of the retention rate. It added 123 customers with annual recurring revenue of $1 million or more, up 28% year-over-year, highlighting penetration among large enterprises.
Is GitLab Stock Undervalued?
For fiscal 2026, GitLab provided revenue guidance of $936 million to $942 million, up 24% year-over-year at the midpoint, with non-GAAP operating income of $109 million to $114 million. The company plans to maintain its focus on responsible growth while continuing to invest in R&D innovation, particularly in core DevOps functionality, security capabilities, and AI products.
Management sees AI as a tailwind rather than a threat to developer seat growth, countering concerns that AI might reduce the need for developers. Staples argued that AI will actually increase the number of software creators and the amount of code generated, driving greater demand for GitLab's platform to manage the quality, security, and compliance of both human and AI-generated code.
Analysts tracking the tech stock expect adjusted earnings to expand from $0.74 per share in fiscal 2025 to $2.01 per share in fiscal 2030. Comparatively, free cash flow is forecast to expand from $120 million in 2025 to $500 million in 2030.
If GTLB stock is priced at 30x forward FCF, it should gain over 80% over the next four years. Out of the 26 analysts tracking GitLab stock, 20 recommend 'Strong Buy,' three recommend 'Moderate Buy,' and three recommend 'Hold.' The average target price for GTLB stock is $73.48, up 40% from the current price.
With strong performance across key metrics, a growing portfolio of innovative products, and strategic focus on fundamentals, GitLab appears well-positioned to continue its growth trajectory and capitalize on the convergence of DevSecOps and AI as it approaches and surpasses the $1 billion revenue milestone.
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