Guggenheim analyst Howard Ma downgraded GitLab Inc (NASDAQ: GTLB) from Buy to Neutral.

The analyst comments: "Within our coverage, we believe GitLab is the most at risk of AI disintermediation. GitLab still remains a leading enterprise platform for managing source code and CI/CD pipelines, supported by a high 90% gross retention rate. But code writing and review is the area where AI has proven the most effective and is already starting to move into part of GitLab’s business. Management has acknowledged budget dollars are shifting away from GitLab in favor of 3rd party AI tools, affecting over 20% of ARR (SMB and some mid-market segments), which could hurt NRR more than the current expectation for only a few points of decline in FY26 vs. 118% in F4Q26. The company has been quick to launch an agentic workflow model via Duo Agent Platform but we’re skeptical of GitLab’s ability to shift from the current seat-based pricing model to credit-based one for agentic workflows without disruption or cannibalization, while the risk for developer headcount casualties remains. Meanwhile, GTM investments to capture new logos are hurting margins (about $50M or 400 bps guide-below consensus to start FY27). Even though downside is limited, we fail to see a near-term upside catalyst. In our plausible scenario, we are modeling total revenue growth of 19% vs. guidance for 16% at the midpoint and non-GAAP operating margin of 14% vs. guidance for 12% at the midpoint."

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Shares of GitLab Inc closed at $21.34 yesterday.