Oppenheimer eyes $38 amid AI resilience

Investing.com — Unity Software (NYSE:U) stock rose 5% Tuesday morning after Oppenheimer upgraded shares to Outperform from Perform and set a price target of $38.

The upgrade comes as Unity shares have been under pressure recently amid broader softness in software stocks due to artificial intelligence fears. The stock closed Monday at $27.53, down 38% since the start of the year.

Oppenheimer analyst Martin Yang dismissed concerns that “world models” like Google’s Project Genie would displace game engines like Unity’s. He described these fears as “fundamentally misplaced,” arguing they ignore Unity’s distinct architectural role in development.

“Current world models generate pixel-based predictions, lacking the deterministic logic, and interactivity required for game development,” Yang explained. “We view these models as asset-generation tools that will feed into the Unity engine, rather than replace it.”

The analyst highlighted Unity’s improving fundamentals, specifically pointing to the successful re-acceleration of the company’s Grow segment and disciplined cost management. Yang projects adjusted EBITDA margins to expand toward 26% by 2026, up from 22% in 2025.

Rather than being threatened by AI, Yang sees Unity as “uniquely positioned to benefit from foundation models.” He noted that AI integration could lower barriers to entry, raise productivity for existing users, and potentially expand Unity’s subscriber base by democratizing development for non-coders.

The $38 price target implies 24 times Oppenheimer’s 2027 adjusted EBITDA estimate of $695 million, with the firm applying multiples in line with Unity’s SaaS peers.

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