Unity Software Inc (U)

[iHub News]

Unity shares jump after Oppenheimer upgrade highlights AI upside

February 10, 2026 10:43 AM
IH Market News

Unity Software (NYSE:U) climbed about 5% in Tuesday morning trading after Oppenheimer upgraded the stock to Outperform from Perform and introduced a $38 price target.

The call comes after a tough stretch for Unity, which has lagged amid broader weakness in software names tied to concerns around artificial intelligence. The stock finished Monday at $27.53, down roughly 38% since the beginning of the year.

Oppenheimer analyst Martin Yang pushed back on worries that so-called “world models,” such as Google’s Project Genie, could render game engines like Unity obsolete. He characterized those concerns as “fundamentally misplaced,” arguing they misunderstand Unity’s core role in the development ecosystem.

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

Yang also pointed to strengthening fundamentals at Unity, highlighting the renewed momentum in the company’s Grow segment alongside tighter cost controls. He expects adjusted EBITDA margins to expand to around 26% by 2026, up from 22% in 2025.

Rather than viewing AI as a threat, Yang said Unity is “uniquely positioned to benefit from foundation models.” He argued that deeper AI integration could reduce barriers to entry, boost productivity for developers, and broaden Unity’s user base by making creation more accessible to non-coders.

The $38 target price reflects roughly 24 times Oppenheimer’s estimate of $695 million in adjusted EBITDA for 2027, a multiple the firm says is in line with comparable SaaS peers.

Unity Software stock price

Original: Unity shares jump after Oppenheimer upgrade highlights AI upside