The technology sector is constantly evolving. While the "Magnificent Seven" group has long been a favorite among investors, the artificial intelligence (AI) revolution is bringing many new players to the forefront. 

San Francisco-based GitLab (GTLB) is one such company, known for its ground-breaking approach to software development and collaboration. As GitLab gains traction with the help of AI, investors are looking at its potential as a disruptive force in the technology sector.

The second growth stock we will discuss here is Wix.com (WIX), which is known for its cloud-based web development platform.  As the digital age evolves, having a strong online presence has become a necessity, especially for businesses. This is where Wix.com comes into play, providing an intuitive and versatile platform that enables users to easily create stunning websites. 

Wall Street is bullish on both stocks, rating them "strong buy" and expecting them to rise by about 40% to 60% in the next year. I am optimistic about both companies’ long-term prospects, too - here's why.

Growth Stock No. 1: GitLab

As GitLab expands its product offerings and customer base, its financial performance has been robust. The company went public in 2021; as per the financial data available, GitLab has increased its revenue from $81.2 million in fiscal 2020 to $579.9 million in fiscal 2024.

Valued at $8.5 million, GitLab stock is down 16.5% year-to-date, compared to the S&P 500 Index's ($SPX) gain of 5%.

Since the company integrated AI into its products, its DevSecOps platform is now allowing it to “plan, build, manage, and deliver software more efficiently” to customers. Total revenue in fiscal 2024 grew 37% year-over-year. The company also reported an adjusted net profit of $0.20, versus a loss of $0.46 in fiscal 2023.

Its dollar-based net retention rate stood at 131% in the fourth quarter, indicating the company's ability to retain and expand its customer base. Total remaining performance obligation (RPO) also increased 55% year-over-year, implying there is more revenue to be recognized in the future. 

Management predicts revenue growth of 30% in the first quarter of fiscal 2025. Revenue for the full year is expected to range between $725 million and $731 million, representing a 26% increase. While the company expects a loss in the first quarter, it anticipates booking a profit between $0.19 and $0.23 per share for the full year. 

By comparison, analysts predict revenue and earnings growth of 26.6% and 20.9%, respectively, in fiscal 2025. 

Wall Street has started to recognize GitLab's long-term potential, fueled by its innovative platform and strong market positioning.

Last month, TD Cowen analyst Derrick Wood reiterated his "buy" rating for GTLB, with a target price of $76. Wood's optimistic outlook is based on the "stabilization of macroeconomic factors, improved key performance indicators, and the emergence of new product catalysts." Wood believes the company's AI-powered products will help drive revenue growth in the coming years.

Additionally, Piper Sandler also reiterated a “buy” rating on GTLB, with a price target of $75.

The stock has an overall “strong buy” rating in the analyst community. Out of the 23 analysts that cover the stock, 17 have a “strong buy” rating, two rate it a “moderate buy,” and four suggest it’s a “hold.” 

The mean target price for GTLB of $71.14 implies the stock could increase by 35.3% from current levels. The stock has a high target price of $85, which suggests a potential upside of 61.7% in the next 12 months. 

Looking ahead, GitLab's future looks promising. The increasing adoption of DevOps practices across industries bodes well for their continued growth. As GitLab continues to innovate and expand, it has the potential to become a high-growth, disruptive company. Plus, the stock is down 33% from its all-time high, making it an ideal time to buy on the dip.

Growth Stock No. 2: Wix.com

Wix’s expanding user base has contributed to consistent revenue growth. Furthermore, Wix's subscription-based business model, which is characterized by recurring revenue streams, offers a level of stability that appeals to investors looking for consistent returns. 

WIX stock is down 1% YTD, lagging the broader market.

In 2023, total revenue increased by 14% year-over-year to $404 million, while adjusted net income came in at $4.39 per diluted share. 

Management expects a recovering macroeconomic environment and 2023 product launches to boost bookings and revenue growth in 2024 and 2025. CEO Avishai Abrahami highlighted, “In just six months, more than 500,000 agencies and freelancers have created Studio accounts, driving the number of Studio premium subscriptions to be ahead of plan.”

In 2024, the company anticipates an 11% to 13% increase in total revenue. Wix also expects to generate $370 million to $400 million in adjusted free cash flow in 2024. For comparison, analysts predict a 12% increase in revenue to $1.75 billion, followed by a 10.9% increase in earnings by 2024.

On Wall Street, WIX has an overall “strong buy” rating. Out of the 18 analysts that cover the stock, 12 have a “strong buy” rating, three rate it a “moderate buy,” and three suggest it’s a “hold.” 

The mean target price for WIX of $153.71 implies the stock could increase by 26.2% from current levels. The stock has a high target price of $175, which suggests a potential upside of 43.7% in the next 12 months. 

Wix makes a compelling investment case, promising both growth and stability in an increasingly digital world. WIX is down 16.7% from its 52-week high, making it an attractive buy for those looking for growth opportunities in the technology sector.