Key Points

• Alphabet and GitLab are misunderstood stocks that are poised to be AI winners.

• Salesforce and ServiceNow are software companies with big AI opportunities in front of them.

• SentinelOne has a big potential catalyst in the second half as its deal with Lenovo rolls out.

• 10 stocks we like better than GitLab ›

The first half of 2025 wasn't kind to a number of promising artificial intelligence (AI) stocks, particularly in the software space. However, the second half could be very different.

Let's look at five stocks that were AI losers in the first half of 2025 that look poised to rebound in the second half.

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Alphabet

Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) continues to be one of the most misunderstood stocks in the market. Investors keep worrying about AI disrupting its core search business, but that misses the bigger picture. Google isn't a search company -- it's a content discovery platform with a huge distribution advantage and decades of behavioral data behind it.

Alphabet's browser and mobile operating system give it an enormous edge. Chrome commands more than 65% of global browser share, while Android runs on over 70% of smartphones. Meanwhile, Google has revenue-sharing deals to be the default search engine across Apple devices and other browsers. As search and AI evolve, that distribution becomes increasingly important.

At the same time, Google has stepped up its game with its new AI-powered Search Mode. In a recent Oppenheimer survey, 82% of users found it more helpful than traditional search, and 75% preferred it to ChatGPT. Importantly, Google doesn't need to change user behavior and have people switch over to its apps. Its billions of users just need to click AI Mode to get this experience.

Its cloud computing business is also gaining traction. Google Cloud revenue rose 28% last quarter, and the company is investing heavily to build capacity to keep up with demand. Add in under-appreciated assets like its Waymo robotaxi business and its Willow quantum chip, and Alphabet looks ready to rebound in the back half.

GitLab

Another company that is misunderstood is GitLab (NASDAQ: GTLB). Investors are worried that with AI, organizations are going to need fewer coders. However, thus far AI has led to more software development, while GitLab has quietly been transforming itself into a software development lifecycle platform.

The company took a big step forward in this direction with the release of GitLab 18. It added over 30 new features, including its Duo Agent Platform, which allows users to deploy AI agents across the entire development cycle from code generation to testing to compliance. This is important, as according to William Blair, developers only spend about 20% of their time actually writing code.

The company has already been growing revenue at a strong clip, including 27% last quarter. The growth is being driven by new customers as well as existing customers buying more seats and upgrading tiers. GitLab has also been expanding key partnerships, including with Amazon.

As a company that is helping drive end-to-end development workflow efficiency, GitLab has a strong future ahead and looks like a solid rebound candidate.

Image source: Getty Images.

Salesforce

Salesforce (NYSE: CRM) has spent the last year refocusing its platform around AI. Its new Agentforce platform has over 4,000 paying customers already, and it's at the center of what could become a much bigger digital labor platform.

The company's strategy is to unify apps, data, automation, and metadata to a single framework called ADAM. It will then use this as a foundation to build and scale AI agents, helping create a digital workforce. It also recently rolled out a more flexible pricing model tied to outcomes to help increase adoption.

Salesforce is already the leader in customer relationship management (CRM) software, and its push into AI agents could be a huge growth driver. With the stock lagging in the first half, it could rebound if Agentforce starts to gain more traction.

ServiceNow

ServiceNow (NYSE: NOW) may not be an obvious AI name, but it's also using AI to help transform its business. The company's roots are in IT management, but it has since expanded into human resources, finance, and customer service.

The company's strength has always been connecting siloed departments and helping organizations streamline their operations. It has embedded AI into its Now Platform, helping take these efforts to the next level. It's been seeing strong traction, with AI-driven Pro Plus deals quadrupling year over year last quarter. As organizations increasingly focus on efficiency and automation to help reduce costs, ServiceNow is well-positioned.

While some investors worry about enterprise software budgets, ServiceNow is a cost-saving platform that should continue to perform well in the current environment. That should help set the stock up to rebound later this year.

SentinelOne

SentinelOne's (NYSE: S) stock was under pressure in the first half of the year, but there's a good reason to believe that it will perform much better in the second half. The big reason is that its new partnership with Lenovo is about to ramp up.

Lenovo is the world's largest enterprise PC vendor, and starting in the second half, it will pre-install SentinelOne's Singularity Platform on all new computers it sells. Existing Lenovo users will also be able to upgrade to SentinelOne's AI-powered security platform. That's a huge opportunity for the cybersecurity company.

SentinelOne has already been seeing solid revenue growth, including 23% last quarter. While it's not the leader in the endpoint security space -- that would be CrowdStrike -- its platform receives high marks from Gartner. Meanwhile, its Purple AI solution, which helps analysts hunt complex security threats through the use of natural language prompts, has been the fastest-growing solution in its history.

All in all, SentinelOne is a solid company whose stock trades at a big discount to some of its bigger peers. Meanwhile, the Lenovo deal should be a catalyst in the second half.

Should you invest $1,000 in GitLab right now?

Before you buy stock in GitLab, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and GitLab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet, GitLab, Salesforce, and SentinelOne. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, CrowdStrike, GitLab, Salesforce, SentinelOne, and ServiceNow. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Key Points

• AMD and GitLab are two beaten-down tech stocks seeing strong AI-related growth.

• e.l.f. Beauty's acquisition of Rhode positions it for a rebound.

• While well off their highs, Dutch Bros and Cava are two of the best growth stories in the restaurant space.

While the market has returned to new highs, not every growth stock has rebounded at the same pace. Five stocks still down 20% or more from all-time highs that look attractive are Advanced Micro Devices (NASDAQ: AMD), GitLab (NASDAQ: GTLB), e.l.f. Beauty (NYSE: ELF), Dutch Bros (NYSE: BROS), and Cava Group (NYSE: CAVA).

Let's look at what each of these five discounted growth stocks brings to the table.

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Image source: Getty Images.

1. Advanced Micro Devices (down 35% from high)

While AMD remains a distant second to market leader Nvidia in graphics processing units (GPUs), it's starting to carve out a meaningful niche in artificial intelligence (AI) inference. That's important because the inference market is expected to become larger than AI training over time, and AMD's cost-effective chips are starting to gain traction.

On its latest earnings call, management said one of the largest AI-model companies is now using its GPUs for a large share of its daily inference workload. Major cloud providers are also turning to AMD chips for AI tasks like search and recommendation engines.

The company already has a leadership position in data central processing units, and its overall data center revenue has been growing strongly. Last quarter, its data center segment soared 57%, helping total revenue climb 36%. AMD doesn't need to unseat Nvidia in the GPU space, it just needs to gain a modest share to drive outsized growth from its smaller base. Given the pullback in the stock, the setup here looks attractive.

2. GitLab (down 65% from high)

GitLab has become one of the most important players in secure software development. Its DevSecOps platform is helping developers build, test, and deploy applications more efficiently in a secure environment, and its recent GitLab 18 launch only strengthens that position. The release includes over 30 new enhancements, including the GitLab Duo Agent Platform, which deploys AI agents across the entire software development life cycle, not just for code but also for documentation, testing, and compliance.

The company is seeing solid growth both from existing customers and new ones. Last quarter, its revenue climbed 27% year over year, while its dollar-based net retention rate was a robust 122%. Much of this growth is coming from existing customers expanding seats and upgrading to higher-tier plans.

While some investors fear that AI will lead to fewer coders over time, thus far, AI has led to an increase in both software development and the number of coders. GitLab stock has fallen too much on this fear, and it looks well-positioned moving forward.

3. e.l.f. Beauty (down 40% from high)

After a red-hot run, e.l.f. shares cooled off after the company's revenue growth slowed significantly to just 4% in its fiscal Q4. However, its recent $1 billion acquisition of Hailey Bieber's Rhode brand has the potential to reaccelerate growth in a big way.

Rhode has already hit $212 million in annual sales with just a handful of products on its website and minimal marketing. With e.l.f.'s strong relationships at Ulta Beauty and Target and Rhode's recent Sephora rollout, e.l.f. has the opportunity to put the brand in front of a lot more consumers. Bieber staying on as chief creative officer ensures brand continuity, and Rhode brings with it premium price points and a strong skincare lineup, which is an ideal complement to e.l.f.'s core mass-market cosmetics strength.

e.l.f. has already proven it can take a lot of market share in mass-market cosmetics, and Rhode adds a big potential growth driver. The company also continues to have opportunities with skincare, international expansion, and potentially moving into other adjacent categories like fragrance over time.

4. Dutch Bros (down 21% from high)

Dutch Bros is still in the early innings of what looks like a multi-year growth story. The drive-thru coffee chain now has over 1,000 locations but sees room for 7,000 over the long term. It's targeting 2,029 shops by 2029, which would still leave it with a long growth runway next decade as well.

Expansion is not the only story with Dutch Bros, though. It's also had strong same-store sales growth, and has an opportunity to continue to ramp it up. Last quarter, its same-store sales rose 4.7%, while company-owned comps climbed 6.9%. However, mobile ordering has just recently been rolled out, and the company has just begun piloting food items. Dutch Bros has admitted that a lack of breakfast offerings has likely cost it sales, and rival Starbucks has shown just how important food items can be, with food representing 19% of its sales last quarter.

Between an opportunity to grow same-store sales and expand its store base, Dutch Bros has a lot of long-term growth ahead of it.

5. Cava Group (down 43% from high)

Another strong growth story in the restaurant space is Cava. The Mediterranean restaurant operator has posted four straight quarters of double-digit same-store sales growth, including 10.8% last quarter. More impressively, traffic was up 7.5%, showing that customers are coming in more frequently despite price increases.

Higher-priced add-ons like pita chips and fresh juice are boosting ticket sizes, and the company is experimenting with new menu items and a tiered loyalty program to keep customers coming back. However, like Dutch Bros, Cava is very much an expansion story.

The company added 15 new restaurants last quarter and plans to open 64 to 68 new locations this year. With just 382 total restaurants as of the end of last quarter and a target of 1,000 by 2032, there's a long runway ahead. Its expansion strategy, dubbed the "coastal smile," has worked well, and a recent push into the Midwest with markets like Detroit and Chicago should accelerate growth even further.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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*Stock Advisor returns as of June 30, 2025

Geoffrey Seiler has positions in GitLab, LVMH Moët Hennessy - Louis Vuitton, and e.l.f. Beauty. The Motley Fool has positions in and recommends Advanced Micro Devices, GitLab, Nvidia, Starbucks, Target, Ulta Beauty, and e.l.f. Beauty. The Motley Fool recommends Cava Group and Dutch Bros. The Motley Fool has a disclosure policy.

As of Friday morning before market open, for the most part stocks weren't having a bad week. As always there were exceptions, however, and one of the unfortunate outliers was software development solutions provider GitLab (NASDAQ: GTLB).

On the back of a quarterly earnings report that disappointed the market, plus subsequent analyst price target cuts and even a recommendation downgrade, the company's share price sagged. As of early Friday morning, the stock had declined by more than 10% week to date, according to data compiled by S&P Global Market Intelligence.

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A forgettable first quarter?

This, despite the fact that GitLab actually posted healthy growth rates in its first quarter. Total revenue rose by almost 27% year over year to $214.5 million, while non-GAAP (adjusted) net income increased more than sixfold to $29.4 million. Both figures topped the average analyst estimates, although not spectacularly.

Image source: Getty Images.

Investors like to concentrate on their view of the road ahead, rather than the numbers behind, so it was GitLab's guidance that had a more profound effect on sentiment.

The company's outlook for its current (second) quarter is for $226 million to $227 million in revenue, filtering down into per-share earnings of $0.16 to $0.17. While the analyst earnings estimate falls within the company's range, that for revenue is just above management expectations.

Goldman gets more bearish

And what was discouraging to investors was also dismaying to quite a few analysts tracking GitLab. A clutch of them reduced their price targets on the stock with one -- white-shoe investment bank Goldman Sachs -- even pulling the lever on a recommendation downgrade. Goldman's Kash Rangan now feels the stock is only a neutral, down from his previous buy, at a price target of $50 per share.

I feel investors and pundits alike are overreacting to the quarterly results. While GitLab's revenue growth is declining, it's still turning in very profitable results and it operates a useful service. I think GitLab is therefore worth a look as something of a bargain play in its niche.

Should you invest $1,000 in GitLab right now?

Before you buy stock in GitLab, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and GitLab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GitLab and Goldman Sachs Group. The Motley Fool has a disclosure policy.

Software development facilitator GitLab (NASDAQ: GTLB) was facilitating some handsome returns for shareholders on Thursday, thanks in no small part to an optimistic new analyst note. In late-session trading the company's share price was up by almost 4%, and doing much better than the slumping S&P 500 index with its 0.2% decline.

Bullish pundit take reiterated

That note was published in anticipation of the release of GitLab's earnings for the fiscal first quarter of 2026, which is scheduled for next Tuesday, June 10. Its author, KeyBanc's Jason Celino, reiterated his overweight (buy, in other words) recommendation on the specialty tech stock, and his price target of $60 per share. That implies potential upside of nearly 22% on the stock's current level.

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Image source: Getty Images.

According to reports, Celino believes GitLab could very well post a year-over-year revenue growth figure higher than the lofty 25.9% analyst consensus. In his view this will be driven by continued take-up of the company's Duo and Dedicated solutions, the former of which is powered by artificial intelligence (AI) functionalities.

That growth should have a positive knock-on effect with GitLab's full-year guidance; the analyst implied that the company's projections for the period will be raised. He did sound a note of caution about the spending of public-sector clients, given recent federal government budget-tightening efforts.

Rolling along

GitLab is indisputably a success story in the tech world, and has solid momentum behind it that looks set to continue. Those public sector clients are something of a worry; however, I feel the company is resilient enough to survive a notable downturn in the segment.

Should you invest $1,000 in GitLab right now?

Before you buy stock in GitLab, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and GitLab wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GitLab. The Motley Fool has a disclosure policy.