Bank of America tells clients to not sleep on this AI play

Bank of America has reiterated a Buy rating and a $72 price target on GitLab (GTLB) ahead of its fiscal second-quarter earnings report, implying 52% upside from its recent $47.26 close. Analyst Koji Ikeda dismisses concerns about AI disruption to GitLab's value proposition, instead highlighting the company's attractive risk/reward profile, faster projected growth relative to peers, and the strategic advantage of its AI tools in managing complex code generation. BofA believes GitLab's leadership in DevSecOps will drive strong adoption of its core and AI offerings, positioning it favorably as it prepares to report Q2 results with estimated EPS of $0.16 on $226.9 million revenue.

Analysis

Bank of America has reaffirmed its bullish outlook on GitLab (GTLB) ahead of its fiscal second-quarter earnings report, reiterating a Buy rating and a $72 price target, which implies a 52% potential upside from its recent $47.26 close. The bank's analyst directly confronts market concerns that artificial intelligence could disrupt GitLab's business model, arguing instead that AI is a net positive. The core of this thesis is that as AI generates significantly more code, the need for a comprehensive DevSecOps platform like GitLab to manage context and purpose becomes more critical. This perspective is supported by recent checks suggesting GitLab's leadership position remains favorable, which is expected to drive healthy adoption of both its core platform and its newer AI-specific solutions. Furthermore, BofA highlights an attractive risk/reward profile, noting that GTLB trades at a valuation comparable to its infrastructure software peers despite projecting superior growth. With the stock down 12% year-to-date, BofA's note positions the upcoming earnings report on September 3—for which analysts forecast $0.16 EPS on $226.9 million in revenue—as a potential catalyst to disprove the bearish AI narrative.

Key Decisions for Investors

• Investors should consider the contrarian view that AI is a net positive for GitLab, as increased code generation may heighten demand for its platform to manage complexity, potentially reframing a perceived risk into a growth driver.
• Given the stock's 12% year-to-date decline and a valuation in line with slower-growing peers, the current price may represent an attractive entry point for those who subscribe to BofA's thesis of superior growth potential.
• The upcoming fiscal Q2 earnings report on September 3 is a critical near-term catalyst; performance against the $226.9 million revenue estimate and management's commentary on AI tool adoption will be key to validating the bullish outlook.