GTLB - AI Integration With Amazon And Google Will Strengthen Future Position

Last Update 23 Dec 25

Fair value Decreased 0.28%

GTLB: Renewed Takeover Buzz Will Drive Future Upside Amid AI Workflow Shift

Analysts have modestly reduced their average price target on GitLab by about $0.15 to approximately $53.52. This reflects a slightly lower long term growth outlook and valuation multiple as they await clearer guidance under new leadership and better visibility into how evolving agentic coding tools may shift value across the DevOps landscape.

Analyst Commentary

Bullish analysts see GitLab as well positioned to continue moving upmarket with its Ultimate product, particularly within its existing enterprise customer base. They view this strategy as a durable driver of higher average contract values and more resilient recurring revenue over time.

At the same time, the initiation at a neutral rating and mid range price target underscores a balanced stance, with the market waiting for clearer signals on leadership execution and the impact of new AI driven development workflows on GitLab’s long term growth algorithm.

Bullish Takeaways

Upmarket momentum with Ultimate is seen as a structural positive. It is viewed as supporting a pathway to sustained double digit growth as larger enterprises deepen platform adoption.
Existing enterprise relationships provide a solid base for expansion. Bullish analysts believe this can partially offset near term macro or budget headwinds and support valuation resilience.
GitLab’s position at the center of DevOps workflows is viewed as strategically important as agentic coding tools mature. This creates optionality for incremental monetization rather than outright disintermediation.
The current valuation, near a neutral fair value, is seen by some as setting a reasonable bar for upside if new leadership demonstrates consistent execution and offers clearer forward guidance.

Bearish Takeaways

Bearish analysts highlight uncertainty around where next year’s guidance will start. This complicates modeling revenue trajectories and justifying a higher valuation multiple in the near term.
Leadership transition risk is cited as a reason to wait for a better entry point, with concerns that execution missteps or conservative commentary could pressure the stock.
As developers capture more value directly from agentic coding tools, skeptics worry that it may become harder for DevOps platforms like GitLab to command premium pricing and maintain their share of the value stack.
The evolving competitive landscape in AI driven software development introduces potential volatility in growth expectations. This leads some to argue that risk reward is currently balanced rather than compellingly skewed to the upside.

What's in the News

Datadog is reportedly working with Morgan Stanley to explore a renewed takeover bid for GitLab that could exceed $60 per share, following earlier sale discussions between GitLab and potential suitors including Datadog (Street Insider, Reuters).
An M&A focused Betaville alert circulated among subscribers highlighted fresh takeover rumors around GitLab, adding to ongoing market speculation about potential strategic transactions (Betaville, The Fly).
GitLab issued guidance for the fourth quarter and fiscal year 2026, projecting Q4 revenue of $251 million to $252 million and full year revenue of $946 million to $947 million, providing investors with updated visibility into near term growth expectations.
GitLab appointed Jessica Ross as chief financial officer effective January 15, 2026, succeeding interim CFO James Shen. This signals a move to permanent finance leadership as the company scales its DevSecOps platform.
GitLab released its annual Global DevSecOps report, highlighting an “AI Paradox” where widespread AI adoption is accelerating coding but fragmented toolchains and compliance complexity are limiting productivity gains. This reinforces the company's platform led strategy.

Valuation Changes

Fair Value: edged down slightly from approximately $53.67 to about $53.52, reflecting a modest reduction in the intrinsic value estimate per share.
Discount Rate: decreased marginally from roughly 8.46 percent to 8.44 percent, implying a slightly lower required rate of return in the updated model.
Revenue Growth: eased slightly from about 18.23 percent to around 18.15 percent, indicating a small downward revision to the long term topline growth outlook.
Net Profit Margin: increased modestly from roughly 12.69 percent to about 12.75 percent, signaling a minor improvement in expected long term profitability.
Future P/E: declined from approximately 67.7x to about 65.2x, suggesting a modestly lower valuation multiple embedded in forward earnings assumptions.

AI-driven platform enhancements, integrated security, and strategic partnerships are strengthening GitLab's competitive position, supporting premium pricing, upselling, and market share gains.
Dual sales-led and product-led growth strategies target broader customer acquisition, especially in mid-market and enterprise, aiming for sustained long-term recurring revenue expansion.
Rising competition, customer growth challenges, and business model shifts pose risks to GitLab's revenue, margin expansion, and predictability of long-term earnings.

Catalysts

About GitLab

Develops software for the software development lifecycle in the United States, Europe, and the Asia Pacific.What are the underlying business or industry changes driving this perspective?

GitLab's expansion of AI-driven capabilities across its DevSecOps platform, including the upcoming Duo Agent Platform with hybrid usage-based monetization, is expected to capture increased demand for automation and developer productivity tools, potentially accelerating revenue growth and expanding margins as high-value features command premium pricing and upsell opportunities.
Enhanced focus on customer acquisition, with parallel tracks for sales-led and product-led growth (PLG), addresses prior deceleration in net new customers and aims to unlock new market segments-especially in mid-market and enterprise-which could result in a broader customer base for sustained multi-year ARR growth.
Continued integration of comprehensive security and compliance features within the platform positions GitLab as a preferred solution for organizations that prioritize embedded security and regulatory requirements, likely supporting further adoption of higher-margin tiers (such as Ultimate and Dedicated), boosting net retention rates and recurring revenue.
The ongoing migration from on-premises to cloud-based development, coupled with GitLab's scaling SaaS and Dedicated offerings (with SaaS up 39% YoY and Dedicated ARR up 92% YoY), will likely improve gross margin leverage, aid in operating efficiency, and support expansion of net margins and free cash flow.
Strong strategic partnerships with leading AI providers (Amazon, OpenAI, Google, Anthropic, Cursor) and native integration with leading AI dev tools enhance the platform's open-ecosystem advantage and toolchain consolidation, which may drive further market share gains and reinforce GitLab's position as the unified platform of choice, positively impacting long-term growth and profitability.

GitLab Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming GitLab's revenue will grow by 21.6% annually over the next 3 years.
Analysts are not forecasting that GitLab will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate GitLab's profit margin will increase from 1.6% to the average US Software industry of 13.1% in 3 years.
If GitLab's profit margin were to converge on the industry average, you could expect earnings to reach $189.5 million (and earnings per share of $1.05) by about September 2028, up from $13.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 74.8x on those 2028 earnings, down from 594.7x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 2.93% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

GitLab Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competition from established players like Microsoft's GitHub and rapidly emerging AI-based developer tools may erode GitLab's market share, compress pricing power, and put downward pressure on both revenue growth and margins over the long term.
The company has experienced a decelerating trend in new customer additions and an increasing reliance on expansion with existing customers, raising concerns about market saturation and the potential for slower ARR (Annual Recurring Revenue) growth, which could lead to more volatile revenue and less predictable long-term earnings.
Ongoing go-to-market organizational changes-including executive turnover, new sales models, and the ramp-up period for new hires-introduce execution risk and could create transitional disruption, potentially leading to inconsistent sales performance or missed growth targets, impacting near
and mid-term revenue and profitability.
The SMB segment is exhibiting persistent softness, reflecting price sensitivity and budget constraints, and with only 8% of total revenue from SMBs, GitLab may struggle to expand meaningfully in this segment while being more exposed to pricing pressures and alternative low-cost or open-source solutions, which could hinder overall revenue growth and net margin expansion.
GitLab's business model shift toward a hybrid seat-plus-usage-based pricing approach has not yet been proven at scale; slow customer upgrade cycles (particularly for on-premises/self-managed deployments) and uncertainty around the pace and magnitude of AI-driven monetization may delay or limit improvement in top-line revenue and operating leverage, affecting long-term earnings outlook.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $61.808 for GitLab based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $85.0, and the most bearish reporting a price target of just $46.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $189.5 million, and it would be trading on a PE ratio of 74.8x, assuming you use a discount rate of 8.4%.
Given the current share price of $46.91, the analyst price target of $61.81 is 24.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

AI Integration With Amazon And Google Will Strengthen Future Position