UiPath vs. Unity: Comparing AI Software Stocks for Growth Potential

UiPath Stock

Investor interest in artificial intelligence (AI) stocks remains strong in 2024, with expectations of significant investments in the AI sector over the next decade. While major players like Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) dominate the headlines, there are lesser-known AI stocks with substantial potential for wealth creation. Two such stocks are UiPath and Unity Software, both included in Cathie Wood’s Ark Innovation ETF. UiPath holds the fifth position in the ETF, while Unity stands at the eleventh spot. Let’s delve into which stock might offer better prospects for investors.

The Case for UiPath Stock

UiPath (NYSE:PATH) specializes in enterprise automation solutions across various industries, including healthcare, telecom, finance, and banking. Despite trading significantly below its all-time highs, UiPath has seen a surge of 35% in the past six months, reflecting the positive sentiment surrounding AI stocks.

With a market cap of $13 billion, UiPath leads in robotics process automation (RPA) and is integrating AI capabilities across its platform. Forecasts predict the RPA market to reach $30 billion by 2030, providing ample growth opportunities for UiPath, which reported $1.31 billion in revenue for fiscal 2024.

Unlike many AI growth stocks, UiPath maintains consistent profitability, reporting adjusted earnings of $0.22 per share in fiscal Q4 2024, surpassing estimates. Analysts project revenue of $1.56 billion and adjusted free cash flow of $350 million for fiscal 2025, indicating a healthy margin of 22%.

Of the 18 analysts covering UiPath, a majority recommend either a strong buy or hold, with an average target price of $25.71, suggesting an upside potential of 11.1%.

Unity Software Stock Analysis

Valued at $10 billion, Unity Software (NYSE:U) has witnessed an 87% decline from its March 2021 highs. The company focuses on developing gaming software and providing solutions for interactive content creation across various platforms.

Unity reported revenue of $451 million in Q4 2023, surpassing estimates, but its losses were higher than anticipated. However, the company has managed to narrow its losses over the past year, reporting an adjusted EBITDA margin of 30% in Q4 2023, a significant improvement from the previous year.

Despite narrowing losses, analysts expect a 16.8% decline in Unity’s sales to $1.82 billion in 2024. Of the 19 analysts covering Unity, recommendations vary, with an average target price of $30.83, indicating a potential upside of 17%.


While analysts favor Unity for its growth potential over UiPath, investors should approach with caution, considering Unity’s recent earnings miss and subsequent stock price decline of approximately 20%.

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