Shares of GitLab (NASDAQ:GTLB) skyrocketed in August, gaining 34.9%, according to data supplied by S&P Global Market Intelligence. That's 90-fold higher than the 2.6% gains of the S&P 500.

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It turns out the threat of artificial intelligence (AI) to the software sector wasn't as bad as some feared.

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Over the past few months, enterprise and software-as-a-service (SaaS) stocks have taken a beating, with the phenomenon labeled the "SaaSpocalypse." The main talking point held that AI agents would take over many of the tasks now accomplished by traditional enterprise software, making those offerings obsolete. The ensuing panic took down a large cross-section of software stocks, and GitLab wasn't spared, losing 48% of its value between early January and early April.

More recently, however, investors have been revisiting those dire predictions and concluding that the truth is more nuanced. Sure, AI agents can automate certain tasks, but it's unlikely they will be able to completely replace complex software deeply integrated into existing business systems.

GitLab's DevSecOps (software development, operations, and security) coding platform, for example, provides a secure environment for software creation. The company stands to benefit from the proliferation of AI, as humans increasingly interact with agents to build software.

Following that realization, there was a flurry of activity on Wall Street, as analysts revised their models and their price targets. After careful consideration, many investment banks decided that the end wasn't nye. In August, a host of analysts raised their price targets on GitLab:

BTIG analyst Nick Altman maintained a buy rating and assigned a $52 price target, up from $36. The analyst argued that far from being displaced by AI agents, the trend was a tailwind for GitLab.

RBC Capital analyst Matthew Hedberg maintained a hold rating on GitLab while increasing his price target to $46 from $29. The analyst cited recent financial results from other software providers that left him more optimistic about the future.

BofA analyst Koji Ikeda maintained a neutral (hold) rating but increased his price target on GitLab to $45 from $38 (the second such increase in August). The analyst cited multiple expansion in the software sector, improving growth, and the easing of AI-disruption fears for his increased optimism.

There were many more, but you get the drift.

Just as September dawned, GitLab reported the results of its fiscal 2027 second quarter (ended July 31) and confirmed what Wall Street had predicted. Revenue of $286.3 million rose 21% year over year, the company's adjusted operating margin ticked higher to 15% from 14% in Q1, and adjusted earnings per share (EPS) of $0.25 was flat. This was well ahead of analysts' consensus estimates of revenue of $273.1 million and adjusted EPS of $0.18.

Other metrics were equally robust. Remaining performance obligation (RPO) -- or contractually obligated revenue that hasn't yet been recognized -- climbed 16% to $1.2 billion, while current RPO (which will be recognized within 12 months) jumped 20% to $744.7 million. This was all far from the SaaSpocalypse-related carnage investors had expected.

GitLab's rebound has had a commensurate impact on its valuation. The stock now sells for 57 times forward earnings and 48 times next year's expected earnings -- so it isn't exactly cheap. However, now that the SaaSpocalypse is in the rearview mirror, the future looks bright.

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Bank of America is an advertising partner of Motley Fool Money. Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool recommends GitLab. The Motley Fool has a disclosure policy.

Why GitLab Stock Soared 35% in August and Why It's Already Rocketed Higher was originally published by The Motley Fool