Is GitLab Stock a Smart Play on Generative AI?

There is an iconic scene in the movie Anchorman where the various San Diego news teams converge for a battle royale. Guys in ill-fitting business suits and ugly ties wield chains and swords. A trident flies through the air. An NPR host chops off the arm of a rival with a machete. It’s great fun. In the aftermath, over beers back at the office, anchorman Ron Burgundy remarks, “Boy, that escalated quickly.”

That’s a bit how the current stock market plunge feels. This volatility has hit tech, and especially AI stocks, harder than most because of a basic financial concept called “beta.” Tech stocks are typically high beta. That means they rise more than the stock market in good times and (wait for it) fall more during bad times. And if you can’t handle the high beta heat, stay out of the disruptive tech kitchen.

While it’s easy to focus on the blood and tears, these downturns are a great opportunity to buy shares of quality companies, especially fast-growing software firms like GitLab (GTLB) that often trade at a premium based on future expectations. Last year, we finally opened a position after the company’s simple valuation ratio (SVR), which divides market cap by annualized revenue, fell to a 12-month average of 13. That was still twice the average SVR of the stocks in the Nanalyze Disruptive Tech Portfolio, but well below