Many analysts expect artificial intelligence software to take off in 2025, with several companies poised to benefit from the rising interest.
Bank of America said in a Jan. 14 research note that while the U.S. software market grew 59% in 2023 and 23% in 2024, development forecasts are still below historical averages.
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“Revenue figures and growth expectations remain below five-year average and pre-Covid levels,” Bank of America said, pointing to three secular themes for 2025: Agentic AI, growing enterprise IT budgets and sustainable cloud migration.
Similarly, investment firm Macquarie expects software stock fundamentals to “remain broadly positive through 2025,” although “possibly accompanied by periods of volatility.”
Related: Bank of America Announces Top Tech Stock Picks for 2025
“We expect positive sentiment to continue, supported by improving revenue trends and optimism around agentic AI,” Macquarie said.
GitLab (GTLB) is a frequently mentioned name that could likely lead the way in the AI software race. The stock lost 10.5% in 2024, but that doesn’t necessarily mean trouble lies ahead.
GitLab is a San Francisco-based, Google-backed software company that operates an open-source repository development platform for programmers.
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 during the software development process.
Last March, GitLab reported weak full-year earnings guidance for fiscal year 2025; the stock fell about 20% after the announcement.
In mid-2024, Reuters reported that GitLab was exploring a possible sale, drawing interest from peers like Datadog, a cloud monitoring company. However, since then no official announcements of a sale have been made 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 the third quarter of fiscal 2025, up 31% year over year.
Related: Analysts upgraded GitLab’s price target after earnings
“GitLab’s growth in scale is a testament to the demand for a platform approach to software development,” said Sid Sijbrandij, co-founder and executive chairman of the board. Sijbrandij was the company’s former CEO, who succeeded Bill Staples in December.
“Our end-to-end DevSecOps platform addresses our customers’ needs to accelerate the pace of software development to stay competitive, innovate faster and deliver software more securely,” said Sijbrandij.
DevSecOps (development, security, and operations) integrates security into every phase of the software development lifecycle. GitLab’s platform streamlines this process and makes software delivery faster and more secure for clients like Nasdaq (THAN) and Southwest Airlines (LUV) .
On December 3, GitLab and Amazon Web Services, a subsidiary of Amazon (AMZN) announced a bundled offering for GitLab Duo with Amazon Q, a generational AI assistant.
“The joint offering integrates AI capabilities from GitLab Duo and Amazon Q into a single interface for AWS customers using GitLab Ultimate,” said Sijbrandij.
Macquarie has named GitLab 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 to accelerate code delivery,” noted Macquarie’s analyst Steve Koenig.
GitLab stock’s key growth drivers could be outperformance of fiscal 2026 revenue expectations, 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 on Gitlab shares.
The company also named several other potential software winners, including Autodesk (ADSC) Salesforce (CRM) MongoDB (MDB) and Atlassian (TEAM) .
More stock market predictions for 2025
Bank of America also named GitLab as the company’s top SMID cap pick for this year, citing rising DevSecOps market share as AI monetization increases.
The company also has a $90 price target on GitLab with a buy rating.
Gitlab closed at $64.2 on January 16. The stock is up 13.7% since the start of 2025.
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