Investors should keep a close eye on this technology stock in 2025.
GitLab (GTLB 1.21%) quickly gained attention after its 2021 initial public offering (IPO) as one of the only pure-play DevSecOps companies, offering a single cloud-native platform for coding, security, and deployment. The stock then fell sharply during the 2022-2023 technology sell-off, witnessing a drawdown of about 80% from the peak.
Recently, GitLab’s stock has begun to recover, driven by the rising adoption of its artificial intelligence (AI)-powered DevSecOps platform. Yet shares still trade at about 63% below their all-time high, highlighting a cautious investor sentiment.
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Despite this, GitLab’s push in AI, security, regulated industries, and public sector can dramatically push up share prices in the coming months. Here’s why.
AI-native strategy
GitLab has positioned itself as an AI-native DevSecOps company, embedding AI across the entire software lifecycle. The company’s AI-powered suite, GitLab Duo (integrated into its DevSecOps platform), is seeing rapid traction. Weekly usage of GitLab Duo has risen sixfold so far in 2025, although the starting customer base was small. Approximately 25% of this usage can be attributed to new customers, who got access to Duo features after they subscribed to either the GitLab Premium or Ultimate tiers.
Recently, GitLab launched Duo Agent Platform, now in public beta, to mainly target large enterprises. This lets engineers work with AI agents to build, test, secure, and deploy software — automating many tasks in parallel to boost productivity and shorten delivery times. Gitlab has noted that many coding assistants can produce code, but it is not always high quality and secure. Gitlab, however, has added privacy, security, and compliance guardrails to maintain standards for enterprise software development.
GitLab has also partnered with Amazon, Anthropic, OpenAI, Alphabet, and Cursor to enable their agents to operate inside its Duo Agent Platform and DevSecOps workflows. This gives customers flexibility to choose AI tools while remaining within GitLab’s secure ecosystem.
Besides developing a high-quality offering, the company is also focused on monetizing it effectively. With Duo Agent Platform, GitLab plans to change its pricing from purely seat-based subscriptions to a hybrid seat-plus-usage-based model. The company is planning for the general availability of Duo Agent Platform by the end of 2025, although it is a very ambitious target. While AI agent activity is expected to generate incremental revenues, the near-term impact may be limited.
Robust financial performance
GitLab’s recent financial performance has been healthy. The company’s revenues rose 29% year over year to $236 million, while non-GAAP operating margin was 17% in the second quarter of fiscal 2026 (ending July 31). Adjusted free cash flow hit $46 million, a dramatic improvement from $10.8 million in the same quarter of the prior year.
GitLab boasts a solid balance sheet with $1.2 billion in cash at the end of the second quarter, giving it the flexibility to fund innovation in AI capabilities, platform enhancements, and go-to-market strategy.
However, Gitlab’s fiscal 2026 revenue guidance seems to have disappointed investors. Management expects fiscal 2026 revenues between $936 million and $942 million despite surpassing consensus revenue targets in the second quarter. The company attributed this conservative stance to the ongoing changes in its go-to-market strategy and tightening budgets in the small and medium business (SMB) segment.
Other growth catalysts
GitLab’s main edge lies in its unified platform where every step of the software development process is tracked and monitored. This full life-cycle context helps improve the accuracy and reliability of the AI recommendations and tools on the platform. Additionally, being the only independent DevSecOps company that works across all clouds and AI vendors, Gitlab gives enterprises and government clients flexibility to choose vendors and tools most fitted for their use cases, thereby avoiding vendor lock-in.
Increasing shift of clients toward GitLab Ultimate, its highest-value tier, is also becoming a key driver for the company. This has been driven by customers wanting robust security capabilities with code development. Ultimate contributed 53% of annual recurring revenues (ARR) at the end of the second quarter, while 8 of the 10 largest deals in the second quarter also included Ultimate.
GitLab is also seeing strong adoption of GitLab Dedicated, its single-tenant software-as-a-service (SaaS) version of its enterprise DevSecOps platform. ARR grew 92% year over year to $50 million, with strong demand from financial services and the public sector. FedRAMP authorization for “GitLab Dedicated for Government” has also opened U.S. federal contracts, making regulated and sovereign workloads a major growth frontier.
All these initiatives are playing a crucial role in securing new high-value clients. The number of clients contributing ARR over $100,000 grew 25% year over year to 1,344 at the end of the second quarter. The company is also proving successful in cross-selling and upselling to existing clients, as evidenced by its dollar-based net retention rate of 121%.
Reasonable valuation
Despite these strengths, GitLab is trading at 9.4 times sales, lower than its three-year average price-to-sales (P/S) ratio of 13.7x.
With growing AI opportunities, an expanding client base, and strong financials, GitLab looks inexpensive relative to its potential. Investors willing to tolerate near-term volatility should consider picking a small stake in this stock now.