Is Cathie Wood's Latest Bargain Hunting a Sign of a Major AI and Tech Rebound?

Cathie Wood's ARK Invest has long positioned itself as a contrarian force in the AI and technology sectors, betting on high-growth opportunities amid market skepticism. As 2025 draws to a close, her recent strategic purchases of undervalued stocks in AI, biotechnology, and energy storage suggest a potential inflection point for the sector. With a $13 trillion software industry opportunity forecasted by 2030 due to AI advancements, Wood's latest moves could signal a broader market rebound. This analysis explores the rationale behind her bets, evaluates key holdings, and assesses whether these positions represent compelling long-term opportunities.

Key Investment Themes: AI, Biotech, and Energy Storage

Wood's 2025 strategy emphasizes three core areas: AI-driven software innovation, AI-powered biotechnology, and energy storage solutions. Her firm's "Big Ideas" report highlights how AI is reducing development costs and boosting productivity, particularly in software and knowledge work. For instance, Datadog (DDOG), a key holding, has seen its AI observability tools grow from 6% to 12% of revenue in just one year according to recent data. Similarly, ARK has increased exposure to AI-driven biotech (e.g., CRISPR Therapeutics) and energy storage (e.g., Tesla) while trimming positions in overvalued consumer tech giants.

Deep Dive into Specific Stocks

1. CRISPR Therapeutics (CRSP): A Biotech Bet with High Conviction

ARK's recent purchase of over 60,000 shares of CRISPR Therapeutics underscores its belief in gene-editing technologies. Despite a mixed analyst consensus with 21 Wall Street analysts rating it "Hold", CRISPR's average price target of $67.42 implies a 17% upside from its current price according to market analysis. Citigroup and Macquarie have highlighted its pipeline advancements, with the latter assigning a $80.19 price target (41.9% upside). Risks include regulatory hurdles, but the company's role in AI-enhanced drug discovery aligns with Wood's thesis as reported by industry sources.

2. Datadog (DDOG): AI Observability as a Growth Engine

Datadog's AI-native revenue grew to 12% of total sales in Q3 2025, doubling from the prior year. While its P/E ratio of 468.55 is high according to financial reports, the company's 28% revenue growth and expanding market for AI monitoring tools justify its premium valuation. Analysts at Macquarie and Wedbush remain bullish, citing its critical role in managing large language model (LLM) workloads.

3. Alphabet (GOOGL): A Long-Term Play on AI Infrastructure

Wood's purchases of Alphabet stock reflect her confidence in its AI-driven advertising ecosystem. With a P/E of 30.65, Alphabet trades at a discount to its 10-year average and peers like Microsoft. Analysts project a 1.15% price increase to $315.90, though Wedbush and Citigroup have raised targets to $350, signaling optimism about its AI roadmap according to market forecasts.

4. GitLab (GTLB): Agentic AI and Developer Tools

ARK's $18 million investment in GitLab highlights its focus on AI-enhanced software development. Despite a P/S ratio of 6.99 down 46.8% YoY, GitLab's "Outperform" rating from Macquarie and a $90 price target (47% upside) suggest undervaluation. The firm's advancements in agentic AI and Ultimate tier adoption are key growth drivers as analysts note.

Valuation Metrics and Analyst Sentiment

The valuation landscape for Wood's holdings varies:
- Meta (META) trades at a P/E of 23.00 according to financial data, significantly lower than Datadog's 468.55 according to financial reports, and a P/S of 9.11 as reported by financial sources, indicating relative value.
- Tesla (TSLA), a top holding, remains central to Wood's energy storage strategy, though specific metrics were not analyzed here.

Analyst sentiment is mixed but generally positive. While CRISPR faces regulatory risks, Alphabet and GitLab enjoy strong buy ratings from key firms according to market analysis. Datadog's high P/E reflects its growth potential, though investors must weigh its volatility according to financial reports.

Risks and Considerations

Wood has warned of a potential "market shudder" in 2026 due to rising interest rates as market analysts predict, which could pressure AI valuations. Additionally, overconcentration in high-growth stocks like Datadog and CRISPR exposes portfolios to sector-specific risks. Investors should also monitor competitive dynamics in AI and biotech, where innovation cycles are rapid.

Conclusion: A Strategic Rebound in the Making?

Cathie Wood's latest investments reflect a calculated bet on AI's transformative potential and undervalued innovation leaders. While valuation metrics vary, the alignment with long-term trends-such as AI-driven productivity, gene editing, and energy storage-suggests these positions could outperform in the coming years. For investors seeking strategic entry points, CRISPR, Datadog, and GitLab present compelling cases, albeit with careful risk management. As Wood's 2025 strategy unfolds, the market may yet witness a significant rebound in AI and tech, driven by those who dare to think decades ahead.