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    Is Unity’s Earnings Beat And AI Pivot Altering The Investment Case For Unity Software (U)?

    Simply Wall St·12/13/2025 16:33:48
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    • In recent months, Unity Software reversed its controversial runtime fee, returned to a subscription billing model, delivered stronger-than-expected quarterly earnings, and attracted a series of analyst upgrades and fresh interest in its AI-powered advertising and real-time 3D tools.
    • At the same time, investors are weighing this renewed enthusiasm against issues like past share dilution, ongoing operating losses, and softer billings, creating a nuanced picture of Unity’s progress and remaining challenges.
    • Next, we’ll examine how Unity’s stronger-than-expected earnings, alongside its AI advertising push, reshapes the company’s investment narrative and risk profile.

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    Unity Software Investment Narrative Recap

    To own Unity today, you need to believe its real time 3D engine and AI advertising platform can eventually justify ongoing losses and past missteps. The key short term catalyst is execution in AI powered ads after the strong Q3 surprise, while the biggest risk is that persistent operating losses and declining billings signal weaker demand and an expensive cost base that is slower to improve than the market expects.

    The clearest recent proof point is Unity’s Q3 adjusted earnings of US$0.20 per share versus an expected loss of US$0.24, driven by AI powered advertising strength. That upside, along with the reversal of the runtime fee and renewed analyst support, helps explain the 97% six month share price surge, but it does not remove concerns about falling billings and share dilution as potential brakes on the story.

    Yet behind the rebound in earnings and AI excitement, investors should be aware of Unity’s history of heavy share dilution and...

    Read the full narrative on Unity Software (it's free!)

    Unity Software's narrative projects $2.3 billion revenue and $313.8 million earnings by 2028. This requires 9.3% yearly revenue growth and a $747.7 million earnings increase from $-433.9 million today.

    Uncover how Unity Software's forecasts yield a $43.70 fair value, a 5% downside to its current price.

    Exploring Other Perspectives

    U 1-Year Stock Price Chart
    U 1-Year Stock Price Chart

    Eight members of the Simply Wall St Community currently see Unity’s fair value anywhere between US$24.17 and US$52.71, underscoring very different expectations. Against that spread, Unity’s ongoing heavy investment in AI and new products, with the risk of delayed profitability, is a central issue that could shape how those views evolve over time, so it is worth weighing several of these perspectives side by side.

    Explore 8 other fair value estimates on Unity Software - why the stock might be worth as much as 14% more than the current price!

    Build Your Own Unity Software Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.