GitLab Inc. (NASDAQ:GTLB) is among the 10 Best New AI Stocks to Buy. On March 10, Morgan Stanley analyst Sanjit Singh lowered the firm’s price target on GitLab Inc. (NASDAQ:GTLB) to $29 from $38 while maintaining an Equal Weight rating following fourth-quarter results. The revision reflects a more cautious outlook, incorporating increased investment levels and moderated near-term expectations, though the company continues to demonstrate strength in enterprise adoption. As of March 4, multiple firms upda ...

Core Insights - GitLab has launched GitLab 18.10, enhancing access to agentic AI capabilities across the software development lifecycle, making it more affordable and easier for organizations to adopt [1][2] Product Features - The GitLab Duo Agent Platform is now available to organizations on the GitLab.com free tier through a monthly commitment of GitLab Credits, allowing immediate access without per-seat costs [2][5] - Agentic Code Reviews are now priced at a flat cost of $0.25 per review, enabling organizations to automate code reviews at scale, which can lead to significant savings compared to manual reviews [3][5] - GitLab Duo Agent Platform includes SAST false positive detection, which helps prioritize serious vulnerabilities and streamline remediation efforts by scoring findings based on false positive likelihood [4][5] Market Position - GitLab serves over 50 million registered users, including 50% of the Fortune 100, indicating strong trust in its platform for delivering secure software efficiently [7][8] - The company aims to accelerate access to advanced agentic AI for software teams of all sizes, enhancing innovation velocity while maintaining security and budget control [6][11]

Financial Performance - Total revenue for the fiscal year ended January 31, 2026, was $955.2 million, representing a growth rate of 26% compared to $759.2 million in the previous year[95]. - The total number of Base Customers increased to 10,682 as of January 31, 2026, up from 9,893 as of January 31, 2025[93]. - The company incurred net losses of approximately $56.0 million, $6.3 million, and $425.7 million in fiscal years 2026, 2025, and 2024, respectively, with an accumulated deficit of approximately $1.2 billion as of January 31, 2026[100]. - As of January 31, 2026, the company had $1,259.9 million in cash, cash equivalents, and short-term investments, up from $992.4 million as of January 31, 2025, indicating a growth of approximately 27%[384]. - The company's cash equivalents and short-term investments primarily consist of money market funds, treasuries, agency securities, corporate debt securities, and commercial paper, totaling $1,183.1 million as of January 31, 2026, compared to $898.3 million in the previous year[384]. Growth and Investment Strategies - The company plans to continue investing in product development, including enhancements related to artificial intelligence, and expanding its sales and marketing efforts[101]. - The company anticipates that its operating expenses will increase as it invests in growth opportunities and infrastructure[100]. - The company plans to expand its marketing and sales capabilities to attract larger organizations, but success is not guaranteed and may divert resources from existing customer maintenance[163]. - The company aims to convert users of free products into paying customers, but this may require sophisticated sales efforts and could be impacted by general economic conditions[162]. - The company may need to change its subscription-based revenue model to remain competitive, which could impact financial stability[136]. Market and Competitive Risks - Future revenue growth may be impacted by factors such as increased competition, changes in technology, and global economic conditions[97]. - Intense competition in the software market could lead to a loss of market share, adversely affecting the company's business and financial condition[115]. - The company competes with well-established providers like Microsoft and Atlassian, which have greater resources and larger customer bases[117]. - The introduction of new services by competitors could make the company's solutions obsolete, impacting its business and financial condition[123]. - The market for the company's services is rapidly evolving, making it difficult to predict customer adoption and demand, which could adversely affect future results[133]. Operational and Compliance Challenges - Significant legal, accounting, and operational expenses are expected as the company continues to operate as a public entity[102]. - The company faces heightened security risks due to the nature of its platform, which allows code execution, increasing the potential attack surface[108]. - Security breaches could lead to litigation, reputational harm, and significant financial liabilities for the company[112]. - The company is subject to evolving privacy laws, including GDPR and CCPA, which impose significant compliance obligations and potential penalties[201][202]. - Compliance with privacy legislation may require additional resources and incur costs, affecting financial condition and operational results[201]. Customer and Revenue Dynamics - The company relies on sales and marketing strategies to drive revenue growth, and any decline in customer renewals could harm future operating results[134]. - Customer renewal rates may fluctuate due to dissatisfaction with pricing or services, which could adversely affect revenue if customers opt for free versions or discontinue use[147]. - A significant portion of annual orders typically comes from new and existing customer renewals in the last two fiscal quarters, influenced by the annual budget approval process[142]. - The company faces potential fluctuations in customer expansions and renewals, which may decline due to factors such as customer satisfaction, pricing, and macroeconomic conditions[139]. - The length of the sales cycle can be unpredictable, particularly for large customers, affecting revenue timing and operational adjustments[222]. Financial and Tax Considerations - The company may need to raise additional capital to support growth and respond to business challenges, which could adversely affect operating results if capital is not raised on acceptable terms[253]. - The company faces potential increases in effective tax rates due to changes in tax laws, including the One Big Beautiful Bill Act, which implements significant corporate tax reforms[257]. - The company is exposed to greater than anticipated tax liabilities due to aggressive interpretations of tax laws by jurisdictions in which it operates[261]. - The company may experience volatility in the market price of its Class A common stock, influenced by factors such as operating results and industry developments[266]. - The company may face dilution of existing stockholders' equity if additional funds are raised through equity or convertible debt issuances[255]. Strategic Risks and Future Outlook - The ability to forecast future results is subject to uncertainties, including the effectiveness of growth management and billing models[99]. - The company faces challenges in transitioning users from free to paid versions of its services, affecting revenue growth[118]. - The company must continuously enhance its services to integrate with various technologies, which requires significant resources and could impact revenue growth if not managed effectively[168]. - The company may engage in merger and acquisition activities, which could disrupt business and dilute stockholder value[185]. - Risks associated with acquisitions include management distraction, integration challenges, and potential negative perceptions from users or investors[186]. Regulatory and Compliance Risks - The company is subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act, as well as Nasdaq listing standards[247]. - The company incurs significant costs related to compliance with the Sarbanes-Oxley Act, including accounting and management oversight expenses[248]. - The company has faced regulatory scrutiny regarding export controls, particularly concerning software exports to countries like Russia and Belarus, which may require licenses[208]. - Any failure to comply with anti-bribery and anti-corruption laws could result in significant penalties and adversely affect the company's reputation and operations[212]. - The company is transitioning certain users in China to its JiHu entity to comply with the Personal Information Protection Law[202]. Human Resources and Culture - The company faces intense competition for highly skilled personnel, particularly in AI and machine learning, which may hinder its ability to hire and retain qualified team members[225]. - The company’s corporate culture is a key contributor to its success, and failure to maintain this culture as it grows could harm innovation and teamwork[228]. - Customization demands from customers may increase upfront investment without guaranteed subscription growth, affecting overall business performance[166]. - The reliance on channel partners for sales and support poses risks, as poor performance from these partners could harm the company's brand and growth[170]. - The company tracks performance metrics using internal tools, which may be subject to inaccuracies, potentially harming reputation and business[173].

Core Viewpoint - Madison Small Cap Fund's fourth-quarter 2025 performance was challenging, underperforming the Russell 2000 Index, with a return of -0.4% compared to the benchmark's 2.2% [1] Fund Performance - The fund's sector allocation negatively impacted its performance, particularly in the healthcare sector, which was the weakest [1] - The fund remains optimistic about the speculative market losing momentum but is cautious about market irrationality [1] GitLab Inc. Overview - GitLab Inc. (NASDAQ:GTLB) is a software development lifecycle platform that covers DevSecOps stages, with a market capitalization of $3.881 billion [2] - As of March 12, 2026, GitLab's stock closed at $22.82 per share, with a one-month return of -22.77% and a 52-week loss of 56.18% [2] Investment Position in GitLab - Madison Small Cap Fund initiated a new investment position in GitLab, highlighting its strategic software tools that assist developers throughout the software development pipeline [3] - GitLab has mid-teens operating margins, a strong balance sheet, and is experiencing double-digit growth in a large market [3] - The company operates in a duopoly with Microsoft's GitHub platform, and the fund has confidence in the recently appointed CEO, Bill Staples [3] - The stock has faced pressure due to concerns about AI-powered competitors, but the fund believes that increased software development will enhance the demand for GitLab's tools [3] - The estimated intrinsic value of GitLab's stock is $75 per share, indicating an attractive investment opportunity at current prices [3]

Core Viewpoint - GitLab's stock experienced a significant decline of 24.8% in February, influenced by broader market trends and macroeconomic concerns, despite no major company-specific news [1][2][4]. Market Performance - The S&P 500 and Nasdaq Composite also faced declines of 0.9% and 3.4%, respectively, during the same period [1]. - GitLab's stock price fell further by 6.5% in March, despite reporting better-than-expected Q4 results [8]. Financial Results - In Q4, GitLab reported a non-GAAP profit of $0.30 per share on sales of $260.4 million, exceeding analyst expectations of $0.23 per share on sales of $252.22 million [7]. - For the current quarter, GitLab anticipates sales between $253 million and $255 million, slightly below the analyst estimate of $256.69 million [9]. - The full-year sales target is set between $1.099 billion and $1.118 billion, which is below the average analyst estimate of $1.13 billion [10]. Guidance and Market Sentiment - The forward guidance provided by GitLab was weaker than expected, contributing to the stock's decline [8][10]. - Geopolitical tensions, particularly the conflict involving the U.S. and Israel with Iran, along with disappointing U.S. payroll figures, have added to market volatility and investor concerns regarding GitLab's growth outlook [11].

Core Viewpoint - GitLab's stock has faced significant declines, down approximately 60% over the past year, following conservative guidance issued after its fourth-quarter earnings report, raising questions about whether it is a good time to invest or divest [1][2]. Financial Performance - For fiscal Q4, GitLab reported a revenue increase of 23% year over year, reaching $260.4 million, surpassing its forecast of $251 million to $252 million [3]. - Subscription revenue grew by 26% year over year to $234.3 million, while license revenue saw a modest increase of 1% to $26.1 million [3]. Customer Metrics - The company achieved a dollar-based net retention rate of 118%, indicating strong growth within its existing customer base [4]. - The number of customers generating $100,000 or more in annual recurring revenue (ARR) increased by 18% to 1,456, and those with $1 million in ARR rose by 26% to 155 [4]. Future Guidance - GitLab's guidance for full-year fiscal 2027 revenue is projected between $1.099 billion and $1.118 billion, reflecting a growth rate of 15% to 17%, which is below the analyst consensus of $1.12 billion [5]. - For fiscal Q1, the company forecasts revenue between $253 million and $255 million, indicating approximately 18% growth at the midpoint, with adjusted EPS expected to be between $0.20 and $0.21 [5]. Strategic Initiatives - Management plans to stimulate growth by increasing the sales headcount and attracting new customers, along with offering more à la carte options to enhance average revenue per user (ARPU) without pressuring price-sensitive customers to upgrade [6].

Core Thesis - GitLab Inc. is viewed positively despite being labeled an "AI loser," with the belief that the rise of AI-generated code will actually increase the need for integrated DevSecOps platforms rather than diminish it [2][3]. Company Overview - GitLab Inc. develops software for the software development lifecycle both in the United States and internationally [2]. - The company's stock was trading at $26.70 as of March 3rd, with trailing and forward P/E ratios of 485.56 and 23.58 respectively [1]. Market Position and Strategy - The market has pushed GitLab's stock toward 52-week lows due to fears surrounding AI's impact on human developers, but this narrative is considered fundamentally flawed [2]. - GitLab's all-in-one model differentiates it from competitors like GitHub by providing a unified lifecycle solution, which is increasingly important as AI-generated code complicates compliance and security [3]. Product and Revenue Insights - GitLab's Duo AI suite is integrated across various stages of the software development process, positioning the platform as AI-native [4]. - 54% of GitLab's revenue now comes from its higher-margin Ultimate tier, highlighting the growing importance of security and compliance in enterprise adoption [4]. Financial Performance - The company has achieved an 18% non-GAAP operating margin in its most recent quarter while maintaining approximately 25% revenue growth [5]. - As GitLab approaches $1 billion in revenue, the operating leverage from its single-platform architecture is expected to become more apparent [5]. Investment Strategy - The stock is trading near all-time low forward price-to-sales multiples, reflecting market skepticism despite improving fundamentals [6]. - A bullish investment strategy involves a September 2026 $60/$75 call spread, which offers defined downside with asymmetric upside potential as the market may re-rate GitLab in light of AI's role in enterprise software development [6]. Historical Context - GitLab's stock price has decreased by approximately 43.19% since previous bullish coverage due to IT sector weakness and conservative guidance, despite earnings that beat estimates [7]. - The current analysis emphasizes the AI mispricing narrative and the potential for asymmetric upside through a 2026 call spread strategy [7].

Core Insights - GitLab is positioned as an intelligent orchestration platform for software engineering, aiming to unify the software life cycle management for organizations [2]. Company Overview - GitLab has transitioned to a new positioning that emphasizes its role in managing the entire software life cycle within a single platform, which was launched about a month ago [2]. - The company has been providing solutions for over a decade, addressing the fragmented nature of the software development space [2]. Industry Context - The software development industry has historically been characterized by fragmentation, with developers utilizing a mix of open source and commercial tools for various tasks, leading to the use of multiple tools within enterprises [3]. - In many organizations, there can be a dozen or more tools employed to handle different aspects of software development, including planning, coding, version control, building, testing, and deployment [3].

GitLab Conference Call Summary Company Overview - **Company**: GitLab - **Positioning**: GitLab is an intelligent orchestration platform for software engineering, providing a unified platform to manage the entire software lifecycle, addressing the fragmentation in the industry [5][6]. Key Financial Metrics - **Annual Recurring Revenue (ARR)**: Reached $1 billion [6]. - **Revenue Growth**: 26% year-over-year growth, with total revenue of $955 million [7]. - **Free Cash Flow**: Increased by 83% year-over-year to $220 million [7]. - **Customer Growth**: Million-dollar customer cohort grew by 26% year-over-year, while the 100K customer cohort grew by 18% [7]. Market Dynamics - **Developer Time Allocation**: Developers spend only 10%-20% of their time writing code; the remaining 80%-90% is spent on surrounding tasks [9]. - **AI Impact**: The introduction of AI tools is leading to increased code generation, creating bottlenecks in code reviews and compliance [12]. Growth Strategy - **Five-Point Action Plan**: GitLab has identified five areas to invest in to reinvigorate growth: 1. **First Orders**: Focus on stabilizing and re-accelerating first order growth, which had been decelerating [19][21]. 2. **Sales Capacity**: Increasing sales capacity to meet growing demand [24]. 3. **Pricing and Packaging**: Introducing new monetizable SKUs to provide more granular options for customers [25][26]. 4. **Price-Sensitive Cohort**: Addressing budget pressures on a specific cohort of customers by offering credits and adjusting coverage ratios [28][30]. 5. **Duo Agent Platform**: Launching a new platform that integrates AI across the software lifecycle [31]. Product Development and Innovation - **Duo Agent Platform**: Launched to provide agentic AI capabilities across the software lifecycle, enhancing customer engagement and value delivery [14][31]. - **Internal Productivity**: GitLab's own engineers using Duo have shown up to 4 times more merge requests per developer compared to those who do not engage heavily with the tool [51]. Capital Allocation - **Share Repurchase Program**: GitLab announced a $400 million share repurchase program [58]. - **Investment Priorities**: Focus on organic growth through R&D, sales and marketing, and maintaining balance sheet resilience with $1.3 billion in cash and short-term investments [58][59]. Competitive Landscape - **Defensibility Against AI Startups**: GitLab's comprehensive platform integrates both AI capabilities and the necessary infrastructure for software development, providing a competitive edge against AI-native startups [46][49]. Conclusion - GitLab is positioned for growth with a clear strategy to address market dynamics, enhance product offerings, and improve customer engagement while maintaining a strong financial position and capital allocation strategy. The upcoming fiscal year 2027 is anticipated to be pivotal for the company [60].

Core Viewpoint - Fears of slowing growth and AI disruption have led to GitLab shares reaching long-term lows, but the sell-off is seen as overdone, presenting a significant investment opportunity [1] Company Growth and Positioning - Despite AI-related concerns affecting the near-term outlook, GitLab continues to grow and is well-positioned for the AI inference era, embedding AI functionality throughout the software lifecycle to enhance efficiency and outcomes while maintaining security and compliance [2] - GitLab's strong cash flow and balance sheet support its growth, allowing for a share buyback authorization of up to $400 million, which is approximately 10% of its post-release market cap [2][3] Financial Health - The balance sheet shows a strong capital position with current assets increasing across all categories, cash and equivalents exceeding liability levels, and no long-term debt, with total liabilities less than equity and a 27% increase in equity for the year [3] - GitLab's shares could potentially double from their March lows based on earnings estimates, with forecasts indicating a compound annual growth rate (CAGR) in the high teens to low 20% through the middle of the next decade [4] Market Sentiment and Analyst Outlook - Tepid guidance and a weak analyst response have contributed to the decline in shares, but institutional investors are likely to buy at these low levels, indicating confidence in GitLab's future performance [5]