US cloud software company GitLab reportedly began mulling a sale after attracting interest from potential suitors, as M&A activity in the technology sector continues to ramp.

Reuters reported GitLab started working with investment bankers on a sale process, with cloud monitoring company Datadog named as a likely buyer. However, sources added an agreement is still weeks away and could fall through.

Google-owned Alphabet has a 22.2 per cent voting stake in GitLab through its venture capital arm, and the company has a current market value of around $8 billion.

Datadog has a market value of $44 billion.

GitLab was founded in 2014 and operates an open-source platform allowing companies to design and manage software using a single tool.

It counts more than 30 million registered users, with Deutsche Telekom, Nvidia and Fujitsu among its telecoms and technology company customers.

Reuters noted deal activity in the technology sector is beginning to increase, with AI and cloud companies attracting interest.

Data from financial markets platform Dealogic showed the sector accounted for the largest share of M&A in the first half of 2024, increasing 42 per cent year-on-year to a total value of $327.2 billion globally.

This week, it emerged Alphabet had entered talks to acquire start-up Wiz for $23 billion, in what would be its largest ever acquisition.

GitLab’s main rival is Microsoft, which acquired software and collaboration platform GitHub in 2018 for $7.5 billion.