Gitlab GTLB shares have lost 18.1% in a month underperforming the broader Zacks Computer & Technology sector’s decline of 8.5%. 

However, Gitlab shares gained 3.6% since the company reported its fourth-quarter fiscal 2025 results on Monday.

The uptick can be attributed to GitLab’s comprehensive DevSecOps platform, including GitLab Ultimate, Dedicated, and GitLab Duo, which played a significant role in driving customer adoption and expanding existing customer relationships.

Click here to check the details of GTLB’s fourth-quarter fiscal 2025 results.

GitLab Underperforms Sector

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In the fourth quarter of fiscal 2025, customers with more than $5000 of Annual Recurring Revenues (ARR) increased to 9,893, up 15% year over year. Customers with more than $100 thousand of ARR increased to 1,229, up 29% year over year, demonstrating GTLB’s ability to attract and retain large enterprise customers.

Strong DevSecOps Partnerships Aid GTLB

GitLab is benefiting from a rich partner network, which includes cloud platforms like Alphabet’s GOOGL Google Cloud and Amazon’s AMZN cloud arm, Amazon Web Services (AWS), and Zscaler ZS. These platforms are helping it expand its footprint among large enterprise customers.

GTLB recently partnered with AWS to launch an AI-powered solution to boost software development and security. The collaboration combines GitLab Duo with Amazon Q’s autonomous agents and aims to streamline workflows, accelerate code delivery and enhance security throughout the development lifecycle.

The integration of GitLab’s DevSecOps platform with Google Cloud services is enhancing developer productivity by streamlining authentication, boosting application deployment and improving the developer experience.

In the fourth quarter of fiscal 2025, GitLab partnered with Zscaler to enhance DevSecOps security by integrating Zscaler’s cloud security solutions with GitLab’s development platform. This collaboration helps organizations improve software security and compliance throughout the development lifecycle.

GitLab Enhances DevSecOps With AI-Powered Duo Tools

GitLab is leveraging AI to boost its portfolio with the introduction of AI-powered tools like GitLab Duo Pro and Duo Enterprise. These tools have helped improve developer productivity by offering code generation and assistance, further strengthening GitLab’s position in the developer community.

GitLab Duo, specifically Duo Enterprise, performed well in the fiscal fourth quarter, driven by customers embracing AI throughout the development lifecycle. Duo’s capabilities were integrated into the workflow of several large customers, accelerating its DevSecOps operations.

GitLab’s Duo Workflow product entered private beta in the fourth quarter of 2024. This new offering, which focuses on AI-driven software development, aims to leverage Generative AI to improve the software development lifecycle, making GitLab even more attractive to AI-driven companies and developers.

Gitlab Provides Positive 1Q26 Guidance

GitLab’s expanded clientele and market leadership in the DevSecOps platform category are contributing to its growth prospects.

For the first quarter of fiscal 2026, GTLB expects revenues between $212 million and $213 million, indicating year-over-year growth of 25-26%.

The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is pegged at $212.7 million, indicating 25.72% growth year over year. 

Non-GAAP fiscal first-quarter earnings per share are expected between 14 cents and 15 cents. 

The consensus mark for earnings is pegged at 14 cents per share, which remained unchanged over the past 30 days. The figure indicates a year-over-year increase of 366.67%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

GitLab Faces Tough Competition in DevSecOps and AI Space

Despite GitLab’s strong growth, it faces intense competition in the DevSecOps space, where other players are continuously innovating. This competitive landscape challenges GitLab to maintain its leadership while evolving its offerings to meet rising customer expectations.

One of GitLab’s strongest competitors, Microsoft, strengthens its position through the seamless integration of GitHub and Azure DevOps. By consistently expanding its DevSecOps capabilities, Microsoft has become a formidable rival, making it even more challenging for GitLab to differentiate itself and sustain its market presence.

Additionally, the rapid evolution of AI toward agentic capabilities is also presenting a challenge for GTLB to stay ahead by continuously integrating autonomous AI features across its platform. Falling behind in AI innovation can erode its competitive edge in an already crowded and intensely competitive AI market.

GTLB Trading at a Premium

We point out that GTLB stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.

In terms of the forward 12-month price/sales (P/S), GTLB is trading at 9.94X, higher than the Zacks Computer and Technology sector’s 5.91X.

Price/Sales (F12M)

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What Should Investors Do With GTLB Stock?

Gitlab’s strong growth, AI-powered DevSecOps platform and solid partnerships position it as a leader in the DevOps space. However, rising competition and near-term profitability pressures pose challenges.

Given the company’s modest growth prospects, we believe that its valuation is significantly stretched, making the stock a risky bet for investors.

Gitlab’s Growth Score of F makes it unattractive for growth-oriented investors.

Gitlab currently carries a Zacks Rank #4 (Sell), which implies that investors should stay away from investing in this stock at present. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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