A Deeper Dive into GitLab’s Growth Potential
In a recent turn of events, the renowned GitLab Inc GTLB presented strong fourth-quarter results. However, the company faced some market pressures due to a mixed outlook for the year 2025.
The Landscape of DevOps Development
Being hailed as “the broadest independent DevSecOps platform,” GitLab stands at the forefront of a vast market, estimated to exceed $120 billion, leaving room for numerous contenders, as highlighted by KeyBanc Capital Markets.
The Analyst’s Perspective
The Analyst’s Outlook: Jason Celino stands firm with his positive assessment by reiterating an Overweight rating on GitLab and a target price of $70.
The Rising Tide of Gen AI
GitLab in the Gen AI Era: With Gartner predicting that 75% of organizations will transition to DevOps platforms by 2027, compared to a mere 25% back in 2023, GitLab emerges as a primary beneficiary of this shift. Its all-encompassing DevSecOps platform covers every aspect of the software development lifecycle (SDLC), Celino noted.
Moreover, in the realm of AI-assisted coding, GitHub holds a considerable chunk of the developer market, boasting over 100 million users globally and pioneering AI code writing through GitHub Copilot, which has already garnered 1.3 million users, according to the analyst.
Adding fuel to GitLab’s growth engine is the surge in gen AI tools, fueling the pace of code creation and potentially augmenting demand for GitLab’s core tools. The introduction of GitLab Duo, an AI-powered add-on, not only opens doors for price hikes but also enables the company to reach a wider audience, including those less inclined towards coding expertise.
Bright Skies Ahead for GitLab
Anticipating sustained growth in the mid-20% range, Celino speculates there is potential for GitLab to outshine with growth rates exceeding 30% in both FY25 and FY26.
Current Positioning of GitLab Stock
Stock Update: At the time of reporting on Tuesday, GitLab’s shares had seen a modest rise of 0.09%, reaching $55.29.
Image: GitLab