GitLab Inc. (GTLB): A Bull Case Theory

We came across a bullish thesis on GitLab Inc. on CompoundingAlpha’s Substack. In this article, we will summarize the bulls’ thesis on GTLB. GitLab Inc.'s share was trading at $34.98 as of January 30th. GTLB’s trailing and forward P/E were 485.56 and 31.95, respectively according to Yahoo Finance.

GitLab Inc. (GTLB) has evolved from a niche open-source project into a mission-critical AI-native DevSecOps platform, emerging as one of the most pivotal digital infrastructure bets of 2026. Under CEO Bill Staples, who took over in December 2024, GitLab has transitioned from a developer tool to a comprehensive Single Application that integrates coding, security, and deployment, addressing the industry-wide “AI Paradox,” where rapid AI-generated code creates bottlenecks in operations and security.

The platform eliminates the “Toolchain Tax,” replacing multiple fragmented tools like Jira, Jenkins, and Snyk with a single, unified system, saving enterprises roughly 25% in software costs. GitLab’s AI suite, GitLab Duo, automates complex tasks such as root-cause analysis, security fixes, and pipeline management, driving a massive upsell from the $29/mo Premium tier to the $99/mo Ultimate tier, which now accounts for over 50% of total ARR. The company serves more than 50% of the Fortune 100, particularly in highly regulated sectors, benefiting from its multi-cloud neutrality and self-hosted “air-gap” deployments.

Financially, GitLab reported $906 million in TTM revenue as of Q4 2025, with a 119% dollar-based net retention rate and $1.2 billion in cash, maintaining zero debt and positive free cash flow of $242 million. The company faces competition from GitHub, particularly in the broader developer ecosystem, but its focus on security, compliance, and enterprise sovereignty creates a durable moat. In base-case scenarios, GitLab compounds steadily with 20% earnings growth, while a successful AI-driven inflection could drive revenue growth above 25% and a five-year CAGR of 39%, positioning it as an indispensable and high-margin infrastructure platform for the modern enterprise.

Previously, we covered a bullish thesis on GitLab Inc. (GTLB) by Compounding Your Wealth in April 2025, which highlighted 31% revenue growth, 18% non-GAAP operating margin, 123% net dollar-based retention, and AI-powered Duo driving Ultimate tier adoption. GTLB’s stock has depreciated by approximately 25.57% since then as investor expectations outpaced actual results. CompoundingAlpha shares a similar perspective but emphasizes GitLab’s Single Application AI-native DevSecOps platform and its role in solving the AI Paradox.

GitLab Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held GTLB at the end of the third quarter which was 47 in the previous quarter. While we acknowledge the potential of GTLB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.