GitLab (GTLB) Analysts Say Fears of AI Replacing Developers Are Overblown

GitLab Inc. (NASDAQ:GTLB) is one of the AI Stocks Analysts Say You Should Watch Closely. On September 11, Guggenheim analyst Howard Ma initiates coverage on the stock with a Buy rating and a price target of $70.00.

According to the firm, AI tools will enhance, not undermine, demand for software platforms for names such as Atlassian and GitLab. Particularly for GTLB, the firm noted how the company is a “leading enterprise-focused DevSecOps platform with 95% gross retention.

It further said that concerns regarding AI coding assistants replaacing developers and threatening GitLab’s seat-based model were “overblown.”

GitLab’s paid user base has accelerated at a double-digit pace over the last year, driven largely by its Duo AI suite and Ultimate tier. The firm believes that this trend is likely to sustain.

“Key Message: We’re initiating coverage of GTLB shares with a Buy rating and $70 price target, representing 43% potential upside. Based on our due diligence, GitLab is the leading enterprise-focused DevSecOps platform. Its strengths in managing the end-to-end software development lifecycle (SDLC) and advanced security features have contributed to >95% gross retention and peer-high growth. Yet GTLB’s valuation, especially on a growth-adjusted basis, has been depressed, due to concerns that AI coding tools will replace software developers, threatening Gitlab’s seat-based model. AI could also disrupt the entire SDLC, putting GitLab’s core value proposition at risk. In our view, these risks are overblown; meanwhile, GitLab has a formidable offensive strategy in play. We estimate GitLab has nearly 2M paid users today, only a fraction of global developer headcount, which continues to rise, even despite AI-driven productivity benefits. On its F2Q26 earnings call, GitLab shared that paid seats have grown double digits y/y and at an accelerating rate over the last four quarters, which we expect to continue. Additionally, GitLab’s Duo AI suite offers more comprehensive features than standalone AI tools today. Together, Ultimate and Duo are driving healthy paid user growth and enterprise expansion, while there is opportunity for price increases, including usage-based pricing for Duo that is in the works. Following 29% revenue growth in F2Q26 marked by significant Total New ARR acceleration, we see GitLab ultimately growing 27% in FY26 (vs. consensus +24%) and 26% in FY27 (8% above consensus, which is at +20%). With peer-high gross margin (90%), we also see room for material FCF margin expansion (vs. 21% in FY26E), making for a sustainable near Rule of 50 status.”

GitLab Inc. (NASDAQ:GTLB) develops software for the software development lifecycle in the US, Europe, and the Asia Pacific.

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