Unity Software Won't Be Replaced by 'World Models,' Oppenheimer Says

MT Newswires Live02-10 23:56

Unity Software (U) will not be replaced by AI "world models," and its current valuation does not reflect the company's improving fundamentals and favorable risk-reward profile, Oppenheimer said in a Tuesday note.

Concerns that world models such as Project Genie of Alphabet's (GOOG, GOOGL) Google will make the Unity engine obsolete are premature, as these do not yet have the deterministic logic and interactivity for game development, Oppenheimer analysts said.

They added that Unity continues to retain its status as an "essential operating system" for game developers.

Rather than being replaced by foundational AI models, Unity is "uniquely" poised to benefit from them through integrations with AI coding assistants that could make the Unity Engine more accessible even for non-coders, the analysts said.

AI-assisted efficiencies in the company's Create segment are expected to boost gaming content creation, which should be positive for its Grow segment as well, the analysts said.

Oppenheimer upgraded the company's stock to outperform and introduced a price target of $38.

Price: 29.11, Change: +1.61, Percent Change: +5.84

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