GitLab just got a vote of confidence from investment firm Rosenblatt, which began covering the stock with a “Buy” rating and a price target of $58. The firm believes GitLab is in a great position as the world of software development continues to evolve, especially with the rise of generative AI.
According to Rosenblatt, GitLab stands to benefit from two major trends: software development is becoming more complex, and more developers are using AI tools to help them write code. Even though AI might automate some basic parts of coding, it’s leading to more code being written overall. Since GitLab offers tools that support the full process of software development, from planning to deployment, this surge in activity works in its favour.
Another reason for optimism is GitLab’s potential to sell more of its premium “Ultimate” plans. Right now, only about 25% of GitLab’s paying customers are using this top-tier plan, which means there’s a lot of room for the company to increase its recurring revenue. The company is also introducing new AI-powered add-ons, which could help push more customers toward higher-priced services.
Rosenblatt also pointed out that GitLab’s profits are expected to grow. Its adjusted operating margin could rise to the mid-teens next year, and potentially go beyond 30% in the long run. For fiscal year 2026, the firm predicts that GitLab will make about $939 million in revenue, a 24% increase from the previous year, and earn $0.75 per share.
The $58 price target suggests a potential return of 36% from current levels. Rosenblatt values the company at 7.8 times its projected revenue for 2027.
In their words, GitLab has become one of the top two all-in-one platforms for software development, with more than 30 million users. They believe the company is expanding into new areas and user types just in time to thrive, and possibly even gain strength, during this new wave of AI transformation.