GitLab (GTLB) – AI-Native Software Play With Room to Run
GitLab has been quietly building a powerful position in the software development world, and the stock looks interesting here after a steep drawdown and a sharp recovery. Trading around $44, the company is still down roughly 53% from its all-time highs, leaving plenty of upside if its growth story continues to play out.
The real driver now is AI. GitLab has embedded artificial intelligence directly into its DevSecOps platform, with GitLab Duo usage climbing sixfold in 2025. The recently launched Duo Agent Platform, now in public beta, lets engineers use AI agents to code, test, secure, and deploy software in parallel—boosting productivity while maintaining security and compliance. The company has also teamed up with heavyweights like Amazon, Alphabet, Anthropic, and OpenAI to integrate their AI models within its platform, which gives customers flexibility while keeping everything inside GitLab’s secure environment.
Financially, the company looks solid. In Q2 of fiscal 2026 (ending July 31), revenue grew 29% year over year to $236 million, with a 17% non-GAAP operating margin and $46 million in adjusted free cash flow—a huge improvement from just $11 million the year before. With $1.2 billion in cash on the balance sheet, GitLab has plenty of firepower to keep funding innovation and expansion.
High-value customers are also leaning in. The number of clients generating more than $100,000 in annual recurring revenue rose 25% year over year to 1,344. Its “Ultimate” tier now contributes more than half of ARR, a clear sign that customers want deeper security and compliance baked into their software development. Meanwhile, GitLab Dedicated has become a strong growth engine, particularly with financial services and the public sector.
Despite this momentum, the stock trades at about 9.4x sales, well below its three-year average of 13.7x. With AI adoption accelerating and GitLab continuing to win bigger enterprise deals, that discount seems unwarranted.
For investors willing to take on some near-term volatility, GitLab looks like a smart way to play AI-driven software development while also gaining exposure to a sticky, expanding customer base.
