Many analysts anticipate that artificial intelligence software will take flight in 2025, with several companies poised to benefit from the surge in interest.
Bank of America said in a Jan. 14 research note that although the U.S. software market grew 59% in 2023 and 23% in 2024, development projections still run below historical averages.
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"Revenue multiples and growth expectations remain below 5-year median and pre-Covid levels,” Bank of America said, pointing to three secular themes for 2025: Agentic AI, growing enterprise IT budgets, and sustained cloud migration.
Likewise, investment firm Macquarie expects software stock fundamentals to “remain generally positive in 2025," although "potentially accompanied by bouts of volatility."
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"We expect positive sentiment to persist, supported by improved revenue trends and optimism on agentic AI," Macquarie said.
GitLab (GTLB) is a frequently mentioned name that could likely run ahead in the AI software race. The stock lost 10.5% in 2024, but that doesn’t necessarily signal trouble ahead.
GitLab partners with Amazon
GitLab is a San Francisco-based Google-backed software company that operates an open-source repository development platform for coders.
Agentic AI refers to AI systems that can learn and make decisions without constant human guidance. In GitLab, this means using AI to help developers automate tasks and make smarter decisions throughout the software development process.
Last March, GitLab reported weak full-year earnings guidance for fiscal 2025; the stock tumbled roughly 20% following the announcement.
In mid-2024, Reuters reported that GitLab was exploring a potential sale, which drew interest from peers like Datadog, a cloud monitoring firm. However, no official announcements of a sale have been made since then, and the company has remained independent.
However, GitLab's most recent earnings report reflected significant growth. Last December, the company posted total revenue of $196 million for Q3 of fiscal year 2025, up 31% year-over-year.
Related: Analysts reset GitLab stock price target after earnings
“GitLab’s growth at scale is a testament to the demand for a platform approach to software development,” said Sid Sijbrandij, co-founder and executive chair of the board of directors. Sijbrandij was the company's former CEO, who Bill Staples succeeded in December.
“Our end-to-end DevSecOps platform addresses our customers’ need to accelerate the pace of software development to remain competitive, innovate faster, and ship software more securely,” Sijbrandij added.
DevSecOps (development, security, and operations) integrates security into every stage of the software development lifecycle. GitLab's platform streamlines this process and makes software delivery faster and more secure for clients like Nasdaq (NDAQ) and Southwest Airlines (LUV) .
On Dec. 3, GitLab and Amazon Web Services, a subsidiary of Amazon (AMZN) , announced a bundled offering for GitLab Duo with Amazon Q, a gen AI assistant.
"The joint offering integrates AI capabilities from GitLab Duo and Amazon Q into a single interface for AWS customers using GitLab Ultimate," Sijbrandij said.
Analysts name GitLab as 2025’s top stock pick
Macquarie has named GitLab as its top stock pick for 2025.
"We believe our top pick, GitLab, is the furthest ahead in capitalizing on agentic AI with its Duo offering for accelerating code delivery," Macquarie’s analyst Steve Koenig noted.
GitLab stock's key growth drivers could include an outperformance in revenue expectations for the fiscal year 2026, margin expansion, improving Rule of 40 scores, and strong free cash flow, Koenig added. He also pointed to a significant valuation discount as a potential factor.
Macquarie has an outperform rating and a $90 price target for Gitlab stock.
The firm also named several other potential software winners, including Autodesk (ADSK) , Salesforce (CRM) , MongoDB (MDB) , and Atlassian (TEAM) .
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Bank of America has also named GitLab the firm’s top SMID-cap pick for this year, citing its rising DevSecOps market share as AI monetization ramps.
The firm also has a price target of $90 for GitLab with a buy rating.
Gitlab closed at $64.2 on Jan. 16. The stock is up 13.7% since the start of 2025.
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