GitLab ( GTLB 0.08%) drew significant interest following its 2021 IPO as a rare, dedicated DevSecOps provider, delivering a unified cloud-native solution for software development, security, and deployment. However, the stock experienced a steep drop during the tech downturn of 2022-2023, with losses approaching 80% from its highest point.
Lately, GitLab shares have started to bounce back, largely thanks to broader use of its AI-driven DevSecOps platform. Still, the stock price remains around 63% below its historical peak, reflecting continued investor caution.
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Even so, GitLab’s advancements in AI, security, regulated markets, and the public sector could provide significant upward momentum for its stock in the near term. Here’s what’s driving this potential.
AI-native strategy
GitLab has carved out a niche as an AI-first DevSecOps provider, weaving artificial intelligence throughout the complete software lifecycle. Its AI-enabled suite, GitLab Duo, fully integrated into its platform, is gaining adoption at a rapid pace. In 2025, weekly usage of GitLab Duo increased six times compared to earlier in the year, though from a modest initial user base. Roughly a quarter of this activity comes from new customers who gained access after subscribing to the Premium or Ultimate plans.
Recently, GitLab introduced the Duo Agent Platform, now in public beta, specifically aimed at large enterprises. This feature allows engineers to collaborate with AI agents for building, testing, securing, and deploying software—automating multiple processes simultaneously to enhance productivity and shorten project timelines. GitLab points out that while many coding assistants can generate code, the results are not always robust or secure. To address this, the company has incorporated privacy, security, and compliance features to uphold enterprise software standards.
GitLab has also joined forces with Amazon, Anthropic, OpenAI, Alphabet, and Cursor, allowing their AI agents to function within GitLab’s Duo Agent Platform and DevSecOps pipelines. This integration offers clients the flexibility to select AI solutions within GitLab’s secure environment.
Beyond refining its product, GitLab is taking steps to maximize revenue from these offerings. With Duo Agent Platform, the company is shifting its pricing approach from solely seat-based subscriptions to a hybrid model that adds usage-based fees. GitLab aims for Duo Agent Platform to be generally available by the end of 2025, though this is a bold objective. While revenue from AI agent activity is projected to rise over time, the immediate financial impact is expected to be limited.
Robust financial performance
GitLab’s latest financial results have been strong. Revenue climbed 29% year over year to reach $236 million, and its non-GAAP operating margin was 17% in the second quarter of fiscal 2026 (ending July 31). Adjusted free cash flow soared to $46 million, up sharply from $10.8 million in the previous year’s comparable period.
The company’s balance sheet is in excellent shape, with $1.2 billion in cash at the close of the second quarter, providing plenty of resources to invest in AI, platform improvements, and market expansion.
Nevertheless, GitLab’s fiscal 2026 revenue projection has underwhelmed some investors. Leadership forecasts revenue between $936 million and $942 million for fiscal 2026, despite having exceeded analyst expectations in the second quarter. The company cites changes to its sales approach and tighter budgets among small and midsize businesses as reasons for this conservative outlook.
Other growth catalysts
GitLab’s primary advantage is its all-in-one platform that tracks and manages every stage of software creation. This comprehensive context enhances the precision and effectiveness of the platform’s AI-powered tools and suggestions. Furthermore, as the sole independent DevSecOps solution compatible with all major cloud providers and AI vendors, GitLab offers organizations the flexibility to select the tools and partners that best meet their needs, avoiding dependence on a single vendor.
The increasing migration of clients to GitLab Ultimate, the company’s premium tier, is emerging as another significant growth driver. Customers are gravitating toward this option for its advanced security features. At the end of the second quarter, Ultimate made up 53% of annual recurring revenue (ARR), and 8 of the 10 largest deals in that period included Ultimate.
Adoption of GitLab Dedicated, the single-tenant SaaS version of its enterprise platform, is also accelerating. ARR for GitLab Dedicated jumped 92% year over year to $50 million, propelled by strong demand from financial institutions and government clients. The FedRAMP authorization for "GitLab Dedicated for Government" has opened the door to U.S. federal contracts, making regulated and sovereign workloads a major area of growth.
Together, these efforts are helping GitLab win more large, valuable customers. By the end of the second quarter, the number of clients contributing over $100,000 in ARR had increased 25% year over year to 1,344. The company has also excelled at expanding business with existing clients, as reflected in its dollar-based net retention rate of 121%.
Reasonable valuation
Although GitLab has many strengths, its shares are currently valued at 9.4 times sales, below the three-year average price-to-sales ratio of 13.7x.
Given its expanding AI prospects, growing customer base, and solid financials, GitLab appears undervalued compared to its long-term potential. Investors prepared to weather short-term fluctuations may want to consider making a modest investment now.
