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Barron's GitLab Stock Is Tumbling. The AI Frenzy Can Be Brutal, Too.

The artificial intelligence frenzy can be a boon for tech companies, but it can also be punishing.

GitLab investors are learning that the hard way as the stock plunged 22% to $57.80 ahead of the open Tuesday following earnings on Monday. It is on track to completely erase its 2024 gains and more in a single day.

GitLab is a DevSecOps platform, which helps companies develop and secure software as well as operate it. Rival software development tools company JFrog was 1% down.

Mizuho analyst Gregg Moskowitz said that while he shares investors’ disappointment regarding the company’s guidance, it was time to “ignore the noise” and buy GitLab stock. “We believe GitLab is oversold (down more than 20% after-hours) and we remain confident in its ability to grow,” he said, citing AI monetization and what he deems to be a conservative revenue impact from pricing. He has a price target of $75. 

D.A. Davidson analyst Gil Luria lowered his price target on the stock to $65 from $75, maintaining a Neutral rating. He said the GitLab’s guidance requires patience.

“Overall, it was noted that despite the number of drivers to revenue in full year 2025, it takes time to build pipeline and close deals suggesting a longer timeline to more meaningful growth acceleration,” he said.

GitLab’s fourth quarter earnings were solid, beating expectations for both revenue and profit, but it was its outlook that left investors and analysts disappointed.

CEO Sid Sijbrandij said the integration of AI to its platform puts the company in a “strong position to continue to win the large market opportunity in front of us,” in a statement Monday.

However, being an AI play comes with heightened expectations, especially after the company’s 18% rise this year through Monday’s close, and 43% jump over the past year.

GitLab expects full-year revenue to be between $725 million and $731 million, below Wall Street estimates for $732 million. Even at the upper end of that range revenue growth will slow to 26% from 37% in the fiscal year 2024. Guidance for adjusted earnings per share of between 19 cents and 23 cents a share was also lower than 35 cents expected by analysts.