The artificial intelligence frenzy can be a boon for tech companies, but it can also be punishing. GitLab investors are learning that the hard way as the stock plunged 22% to $57.80 ahead of the open Tuesday following earnings on Monday. It is on track to completely erase its 2024 gains and more in a single day.
Understanding GitLab
GitLab is a DevSecOps platform, which helps companies develop and secure software as well as operate it. Rival software development tools company JFrog was only 1% down.
Analyst Perspectives and Recommendations
Mizuho analyst Gregg Moskowitz remains optimistic about GitLab despite the recent plunge. He believes that investors should “ignore the noise” and buy GitLab stock due to its oversold nature and growth potential. He highlights AI monetization and conservative revenue impact from pricing as key factors. Moskowitz has set a price target of $75 for the stock.
D.A. Davidson analyst Gil Luria, however, has a more cautious stance. He lowered his price target on the stock to $65 from $75 while maintaining a Neutral rating. He emphasized the need for patience with GitLab’s guidance in order to see long-term results.
GitLab Reports Strong Fourth Quarter Earnings, Disappoints with Outlook
In the full year 2025, despite numerous drivers for revenue growth, GitLab faces challenges in building pipeline and closing deals, which may delay meaningful growth acceleration.
Solid Earnings Performance
GitLab’s fourth-quarter earnings surpassed expectations, demonstrating strength in both revenue and profit. However, the company’s outlook fell short of investor and analyst expectations, leading to disappointment in the market.
AI Integration
CEO Sid Sijbrandij highlighted the integration of AI into GitLab’s platform, positioning the company well to capitalize on the vast market opportunity ahead. Yet, as an AI-focused business, GitLab faces heightened expectations following its recent stock gains of 18% this year and a 43% rise over the past year.
Revenue Projections
GitLab anticipates full-year revenue to range between $725 million and $731 million, slightly below Wall Street estimates of $732 million. Even at the higher end of this range, revenue growth is expected to slow to 26% from 37% in fiscal year 2024. Likewise, the guidance for adjusted earnings per share, between 19 cents and 23 cents, falls short of the 35 cents anticipated by analysts.
AI Expectations
Amidst the AI rally, GitLab finds itself in a situation where there is limited tolerance for delays or setbacks. As the company navigates these challenges, the focus remains on delivering sustainable growth and meeting market expectations.
