SaaS stocks have gained 56.3% over the past six months, outpacing the S&P 500's 12% rise. Still, StockStory says AI is eating into the profits of software firms with low switching costs, so only the strongest will last. It favours GitLab (NASDAQ:GTLB), valued at $8.66 billion. Revenue grew 25.9% a year over two years, annual recurring revenue rose 23.3% in the last year, and gross margin is 85.9%. The stock trades at $50.42, or 7.8x forward price-to-sales. It is wary of two others. Elastic (NYSE:ESTC), worth $9.90 billion, posted billings growth of 14% and flat operating margin. Wix (NASDAQ:WIX), worth $3.00 billion, saw billings growth of 13.9% and a 17.5 percentage point drop in operating margin.

GitLab has announced new capabilities for what it calls a "governed software factory", aimed at helping organisations deploy AI-generated software whilst managing risk and cost. The platform now includes goal-driven workflows that automate progression across the software development lifecycle, reducing handoffs between stages. Key additions include GitLab Artifact Central, which centralises containers and packages alongside source code, and GitLab Dependency Firewall, which blocks malicious or non-compliant packages before they enter builds. GitLab Secrets Manager, now generally available, secures credentials in one location. The platform will integrate Anthropic's Claude Mythos 5 and 5.1 models for security workflows. New Impact Analytics tools show AI investment costs and outcomes by team and model. GitLab reports active users of agentic software development grew 200% year-over-year over the past three months, with over 70 million developers using the platform.

GitLab reported Q2 revenues of $286.3 million, up 21.3% year-on-year and exceeding analyst expectations by 4.8%. The company delivered strong billings results and EPS guidance for the next quarter. Chief executive officer Bill Staples highlighted record gross bookings and net annual recurring revenue growth exceeding 40% year-on-year. He noted that as AI drives more software creation, GitLab's platform provides increasingly valuable context, security, governance, and control for human and AI agent collaboration. The DevSecOps platform provider's shares rose 3.3% following the earnings announcement. The quarter was part of a strong performance across the software development sector, where 12 tracked companies collectively beat revenue estimates by 3.2%. GitLab operates with an all-remote workforce and provides tools helping development, operations, and security teams collaborate to build and deploy software.