Google deal with Windsurf applies pressure to GitLab, JFrog: BofA

Google’s (NASDAQ:GOOG)(NASDAQ:GOOGL) $2.4B deal with the artificial intelligence code generation tool company Windsurf for its licensing rights and talent will likely increase competition in the DevSecOps space. This could apply pressure on companies such as GitLab (NASDAQ:GTLB) and JFrog (NASDAQ:FROG), according to Bank of America.

“AI-powered code generation tools like Windsurf and Cursor are at the center of the investment narrative for DevSecOps category (application development, security, operations),” said BofA analysts, led by Koji Ikeda, in a Monday investor note. “This is because of the rapid scaling of code-gen tools usage and revenue growth disclosed by some of the private code gen tools, and what we believe are the tangible benefits of generative AI and agentic AI in the category.”

BofA noted that GitLab has recently highlighted its future position in the AI-powered DevSecOps space.

“With all the noise around private code generation tools (valuation, growth, differentiation), and GitLab electing to include some of its AI capabilities (e.g., code suggestions) in paid tiers (Premium and Ultimate) at no additional cost, we believe there will be elevated focus on proving it has the right code generation tool adoption strategy in place,” Ikeda said.

JFrog might also need to better defend its position in the space.

“With the debate of code generation tools becoming the key land to potentially have the right to win the rest of DevSecOps workflows, and platform vendors like GitLab talking about adding more binary repository functionalities, we believe a heightened debate on JFrog’s category leadership over the long-term could arise,” Ikeda added. “Based on our prior work , we believe JFrog is the leader among the top three vendors we hear about the most, especially for the enterprise. However, if the binary repository workflow is becoming more strategic, JFrog may need to defend its leadership position more aggressively.”

BofA assigned Buy ratings to both GitLab and JFrog with price objectives of $72 and $48, respectively.

Google’s deal with Windsurf took some of the air out of OpenAI’s sails, which was reportedly working on a deal to acquire Windsurf for $3B back in May.