Unity Software Inc. (U - Free Report) closed the most recent trading day at $28.62, moving -1.11% from the previous trading session. The stock's change was less than the S&P 500's daily gain of 0.05%. Meanwhile, the Dow experienced a rise of 0.46%, and the technology-dominated Nasdaq saw a decrease of 0.64%.
The company's shares have seen an increase of 8.35% over the last month, surpassing the Computer and Technology sector's loss of 3.62% and the S&P 500's gain of 0.61%.
The upcoming earnings release of Unity Software Inc. will be of great interest to investors. The company's earnings report is expected on August 6, 2026. The company is predicted to post an EPS of $0.24, indicating a 192.31% growth compared to the equivalent quarter last year. Meanwhile, the latest consensus estimate predicts the revenue to be $510.89 million, indicating a 15.86% increase compared to the same quarter of the previous year.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $1.04 per share and revenue of $2.11 billion. These totals would mark changes of +20.93% and +14.29%, respectively, from last year.
Investors should also take note of any recent adjustments to analyst estimates for Unity Software Inc. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 8.09% higher. As of now, Unity Software Inc. holds a Zacks Rank of #1 (Strong Buy).
In the context of valuation, Unity Software Inc. is at present trading with a Forward P/E ratio of 27.83. This signifies a premium in comparison to the average Forward P/E of 18.34 for its industry.
We can additionally observe that U currently boasts a PEG ratio of 1.17. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As of the close of trade yesterday, the Internet - Software industry held an average PEG ratio of 1.02.
The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 154, finds itself in the bottom 38% echelons of all 250+ industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
The Zacks Internet Software industry is facing meaningful execution challenges as AI adoption accelerates. One of the biggest concerns is balancing rapid software development with governance and security. Monetizing AI also presents challenges. Macroeconomic conditions continue to weigh on software spending. The industry participants are facing the challenge of continuously investing in AI infrastructure while maintaining profitability. These players are committing substantial resources toward AI models, cloud infrastructure, engineering talent and platform modernization to remain competitive. However, industry players like Unity Software (U - Free Report) , HubSpot (HUBS - Free Report) and GitLab (GTLB - Free Report) are benefiting from rapid adoption of AI, which is expanding software usage. AI is driving higher platform engagement, broader enterprise adoption and new monetization opportunities.
Industry Description The Zacks Internet Software industry comprises companies offering application performance monitoring, infrastructure and application software, DevOps deployment and Security software. Industry participants offer online payment solutions, asset optimization software, multi-cloud application security and delivery, social networking, 3D printing applications, and cloud content management solutions. They use the SaaS-based cloud computing model to deliver solutions to end-users, as well as enterprises. Hence, subscription is the primary revenue source. Advertising is also a major revenue source. Industry participants target a variety of end markets, including banking and financial services, construction, consumer packaged goods, education, energy, legal, various service providers, federal governments, and animal health technology and services.
3 Trends Shaping the Future of the Internet Software Industry Enterprise Software Infrastructure Growing Rapidly: The industry is benefiting from rapid AI adoption, which is driving demand for enterprise software infrastructure. AI-generated code is driving sharp increases in code pushes and platform usage, creating structural demand for DevSecOps platforms that can manage security, governance and deployment at machine scale. Growing requirement of integrated platforms capable of orchestrating both human developers and AI agents while maintaining compliance and operational control is benefiting the industry’s prospects. Platform consolidation is becoming increasingly attractive as enterprises seek unified data and AI infrastructure.
Consumption-Based Pricing Gains Traction: The emergence of AI-native pricing models is a key catalyst. The industry players are moving beyond traditional seat-based licensing by introducing consumption-based credits and outcome-driven pricing. The companies are allowing customers to scale usage as AI adoption expands, opening new monetization channels that extend beyond conventional software subscriptions. AI-powered agents, automation and consumption-based pricing are creating incremental revenue streams while increasing customer productivity.
AI Agents & AI-Workloads Create Opportunities: The growing need to secure cloud platforms amid the increasing incidences of cyberattacks and hacking drives the demand for web-based cybersecurity software. As enterprises continue to move their on-premises workloads to cloud environments, application and infrastructure monitoring are gaining importance. This is increasing the demand for web-based performance management monitoring tools. AI applications, AI agents and cloud-based AI workloads are expanding the attack surface for businesses, which bodes well for industry participants.
Zacks Industry Rank Indicates Dim Prospects The Zacks Internet Software industry, placed within the broader Zacks Computer and Technology sector, carries a Zacks Industry Rank #152, which places it in the bottom 38% of more than 247 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. The industry’s earnings estimates for 2026 have moved south by 1.7% since Aug. 31, 2025.
Given the bearish outlook of the industry, there are only a few stocks worth picking for healthy portfolio returns. However, before we present the top industry picks, it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Lags S&P 500 and Sector The Zacks Internet Software industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 Index in the past year.
The industry has dropped 14.8% over this period compared with the S&P 500’s jump of 20.8% and the broader sector’s appreciation of 29.9%.
One-Year Price Performance
Industry's Current Valuation On the basis of forward 12-month price-to-sales (P/S), which is a commonly used multiple for valuing Internet Software stocks, we see that the industry is currently trading at 3.96X compared with the S&P 500’s 4.97X and the sector’s forward 12-month P/S of 6.71X.
Over the last five years, the industry has traded as high as 6.12X and as low as 3.69X, with a median of 4.73X, as the charts below show.
Forward 12-Month Price-to-Sales (P/S) Ratio
3 Internet Software Stocks to Buy Right Now Unity Software: This Zacks Rank #1 (Strong Buy) stock is benefiting from the rapid adoption of AI across game development and interactive content creation. You can see the complete list of today’s Zacks #1 Rank stocks here.
AI is accelerating game production, increasing new developer sign-ups and expanding demand for game discovery and monetization tools. The company is leveraging these trends through Vector, its AI-powered personalization platform, Unity AI for content creation and the upcoming commerce platform, while AI-native pricing models tied to agent usage are expected to create additional long-term revenue opportunities.
Unity shares have dropped 33.7% year to date (YTD). The Zacks Consensus Estimate for 2026 earnings has inched up by a penny to $1.04 per share over the past 30 days.
Price and Consensus: U
HubSpot: Another Zacks Rank #1 company, HubSpot's growth outlook is supported by rising enterprise adoption, platform consolidation and increasing AI monetization. The company continues to benefit from upmarket customer wins, multi-hub adoption and pricing initiatives, while AI-enabled offerings such as Customer Agent, Prospecting Agent and Data Agent are driving higher credit consumption and expanding recurring revenue opportunities.
The company believes that combining unified customer data with AI agents positions HubSpot as a comprehensive growth platform, enabling customers to automate marketing, sales and service workflows while increasing platform adoption over time.
HUBS shares have dropped 48.9% YTD. The Zacks Consensus Estimate for its 2026 earnings is pegged at $13.11 per share, down by a penny in the past 30 days.
Price and Consensus: HUBS
GitLab: This Zacks Rank #1 company is well positioned to benefit from the structural shift toward AI-powered software engineering. GitLab is winning larger enterprise deals as customers consolidate DevSecOps workflows on a single platform with integrated security, compliance, and AI. GitLab Ultimate anchors the upsell motion, while Dedicated and the Duo Agent Platform broaden deployment and monetization choices.
GitLab’s fiscal 2027 guidance points to continued revenue growth with non-GAAP operating profitability, supported by high cash generation and ongoing share repurchases. Remaining performance obligations of near $1.1 billion support revenue visibility as renewals and expansions flow through. Rising SaaS activity and early credit consumption indicate AI-assisted development is increasing usage across GitLab’s lifecycle.
GitLab shares have dropped 16.4% YTD. The Zacks Consensus Estimate for GTLB’s fiscal 2027 earnings is pegged at 81 cents per share, unchanged over the past 30 days.
Key Takeaways ANET is benefiting from AI networking demand and raised its 2026 AI revenue target to $3.5 billion. HUBS is seeing rapid AI agent adoption, with AI feature credit consumption up 67% quarter over quarter. U and IOT are expanding AI-powered platforms to improve automation, customer growth and efficiency. Artificial intelligence (AI) is rapidly reshaping the global technology landscape, driving a new wave of enterprise software spending. Businesses across industries ranging from manufacturing and healthcare to retail and financial services are accelerating investments in generative AI, large language models (LLMs), AI agents, intelligent automation, cloud platforms, and data analytics to improve productivity, enhance customer experiences, and streamline operations.
The AI boom is benefiting a broad range of software companies, including Arista Networks (ANET - Free Report) , Unity Software (U - Free Report) , HubSpot (HUBS - Free Report) and Samsara (IOT - Free Report) , which are integrating AI into their platforms to enhance product capabilities, improve customer outcomes and strengthen competitive positioning.
Before discussing the stocks in detail, let’s dig deeper into the trends.
Software Companies Gain From Rising Enterprise AI SpendingSoftware companies are benefiting from strong AI adoption by embedding intelligent copilots and automated agents into existing platforms, shifting from basic subscription models to consumption-based pricing. They are also using AI to dramatically accelerate their software development life cycles while expanding their data infrastructure capabilities to meet rising enterprise demands.
Continued strength of AI-driven software spending has been a key catalyst. Businesses are increasingly adopting solutions such as voice recognition, telehealth platforms, learning management systems, infrastructure monitoring software and spend management tools. Collaboration platforms, communication software and online education services are also seeing steady demand as workplaces and learning environments continue to evolve.
The pace of AI investment continues to accelerate. Gartner forecasts worldwide AI spending to reach $2.59 trillion in 2026, up 47% year over year, driven by higher investments in AI infrastructure, cloud services and enterprise software. It also expects end-user spending on AI models and platforms to reach $64 billion in 2026, up 63.4% from $39 billion in 2025. Spending on generative AI models is expected to surge 117%, while AI platform spending is projected to increase 36.9% in 2026. The growing adoption of AI-powered applications is creating significant opportunities for software companies that offer AI-enabled platforms and solutions.
Another major trend is the rise of Agentic AI. Software vendors are adopting usage-based AI pricing models, accelerating software development with AI coding tools and strengthening AI governance and compliance capabilities. The demand for multi-cloud interoperability is increasing, allowing enterprises to connect AI models and business systems seamlessly. These trends are positioning leading software companies to benefit from expanding AI adoption over the long term.
Our PicksUnity Software is benefiting significantly from the expanding adoption of AI across the interactive content industry. Unity’s AI-driven products, such as Vector and Unity AI, are accelerating game development, enhancing personalization and driving both user and creator growth. With 90% of game developers already using AI in their workflows and new Unity sign-ups up 20% quarter-over-quarter, Unity is positioned at the center of this transformation. In the first quarter of 2026, Strategic revenues grew 35% year over year, and AI-powered tools are driving both user and creator growth.
This Zacks Rank #1 (Strong Buy) company’s Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $1.03 per share, which has been unchanged over the past 30 days. This represents 19.77% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
HubSpot is benefiting significantly from expanding AI adoption, positioning the company for further upside. In the first quarter of 2026, the company highlighted that HubSpot’s AI-first strategy is translating into measurable growth, with AI-driven products like Customer Agent, Prospecting Agent and Data Agent seeing rapid adoption and usage. Active core seat users grew 90% year over year, and credit consumption for AI features surged 67% quarter over quarter. Customers are integrating AI into daily workflows, driving real outcomes such as improved CRM accuracy and higher support resolution rates.
This Zacks Rank #1 company’s Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $13.11 per share, which has been unchanged over the past 30 days. This represents 35.15% year-over-year growth.
Arista Networks is benefiting from the accelerating adoption of AI, which is driving unprecedented demand for high-speed networking solutions. In the first quarter of 2026, Arista Networks achieved the #1 market share in high-speed switching above 10-gigabit Ethernet, largely due to its robust cloud and AI networking strategy. With more than 100 customers deploying 800-gigabit Ethernet and a raised AI revenue target to $3.5 billion for 2026, Arista’s innovative products like the Etherlink portfolio and XPO optics are driving growth.
This Zacks Rank #2 (Buy) company’s Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $3.64 per share, which has increased by a penny over the past 30 days. This represents 22.15% year-over-year growth.
Samsara is benefiting from the expanding adoption of AI across the physical economy, positioning itself for further upside. As AI transitions from digital to physical applications, Samsara’s Connected Operations Platform leverages IoT hardware and AI to deliver real-time insights and automate workflows for asset-heavy industries. Customers are increasingly adopting AI-driven solutions like video-based safety, Waste Intelligence and Ground Intelligence, which help reduce costs, improve safety and boost operational efficiency. With more than $2 billion in ARR and strong growth in large customer segments, Samsara’s focus on operational AI and emerging products is driving durable, scalable growth.
This Zacks Rank #2 company’s Zacks Consensus Estimate for fiscal 2026 earnings is pegged at 75 cents per share, which has been unchanged over the past 30 days. This represents 33.93% year-over-year growth.
Shares of Unity Software Inc. (U - Free Report) have gained 7.8% over the past four weeks to close the last trading session at $29.27, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $37.22 indicates a potential upside of 27.2%.
The average comprises 22 short-term price targets ranging from a low of $28.00 to a high of $54.00, with a standard deviation of $6.03. While the lowest estimate indicates a decline of 4.3% from the current price level, the most optimistic estimate points to a 84.5% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
But, for U, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why U Could Witness a Solid UpsideThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 8.1%, as one estimate has moved higher compared to no negative revision.
Moreover, U currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much U could gain, the direction of price movement it implies does appear to be a good guide.
Unity Software Inc (NYSE:U) is drawing renewed optimism from Wall Street ahead of its second-quarter earnings.
Wedbush is raising its price target on the stock to $36 as Unity works through a significant business transition. The company's ironSource Ad Network is being sunset effective April 30, and its Supersonic unit is slated for divestiture, leaving Unity's business increasingly concentrated on its Vector advertising platform and core game engine.
Wedbush analysts said they had confidence in Unity's ability to recapture ad spend that had been flowing through the winding down ironSource network. According to the analysts, roughly 60% of ironSource spend has already migrated to Vector, and one advisor's firm now allocates about 20% of its budget to Vector, up sharply from around 5% before Unity overhauled its algorithm last year.
That data point is driving Wedbush to lift its longer term estimates, with the firm now projecting Unity's adjusted EBITDA will reach $915 million by fiscal 2028.
Unity is scheduled to report second quarter results before the market opens on August 6.
In the latest close session, Unity Software Inc. (U - Free Report) was down 2.01% at $29.27. The stock fell short of the S&P 500, which registered a loss of 0.14% for the day. Meanwhile, the Dow lost 0.01%, and the Nasdaq, a tech-heavy index, lost 0.57%.
Coming into today, shares of the company had gained 8.19% in the past month. In that same time, the Computer and Technology sector lost 4.82%, while the S&P 500 gained 0.25%.
Analysts and investors alike will be keeping a close eye on the performance of Unity Software Inc. in its upcoming earnings disclosure. The company's earnings report is set to go public on August 6, 2026. On that day, Unity Software Inc. is projected to report earnings of $0.24 per share, which would represent year-over-year growth of 192.31%. At the same time, our most recent consensus estimate is projecting a revenue of $510.89 million, reflecting a 15.86% rise from the equivalent quarter last year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $1.03 per share and revenue of $2.11 billion, which would represent changes of +19.77% and +14.14%, respectively, from the prior year.
It's also important for investors to be aware of any recent modifications to analyst estimates for Unity Software Inc. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 5.65% higher. Unity Software Inc. is currently a Zacks Rank #1 (Strong Buy).
In the context of valuation, Unity Software Inc. is at present trading with a Forward P/E ratio of 28.91. This expresses a premium compared to the average Forward P/E of 19.55 of its industry.
Also, we should mention that U has a PEG ratio of 1.21. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. By the end of yesterday's trading, the Internet - Software industry had an average PEG ratio of 1.06.
The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 104, finds itself in the top 43% echelons of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.
Unity Software Inc (NYSE:U) is drawing renewed optimism from Wall Street ahead of its second-quarter earnings.
Wedbush is raising its price target on the stock to $36 as Unity works through a significant business transition. The company's ironSource Ad Network is being sunset effective April 30, and its Supersonic unit is slated for divestiture, leaving Unity's business increasingly concentrated on its Vector advertising platform and core game engine.
Wedbush analysts said they had confidence in Unity's ability to recapture ad spend that had been flowing through the winding down ironSource network. According to the analysts, roughly 60% of ironSource spend has already migrated to Vector, and one advisor's firm now allocates about 20% of its budget to Vector, up sharply from around 5% before Unity overhauled its algorithm last year.
That data point is driving Wedbush to lift its longer term estimates, with the firm now projecting Unity's adjusted EBITDA will reach $915 million by fiscal 2028.
Unity is scheduled to report second quarter results before the market opens on August 6.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?
Let's take a look at what these Wall Street heavyweights have to say about Unity Software Inc. (U - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Unity Software currently has an average brokerage recommendation (ABR) of 1.73, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 26 brokerage firms. An ABR of 1.73 approximates between Strong Buy and Buy.
Of the 26 recommendations that derive the current ABR, 16 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 61.5% and 3.9% of all recommendations.
Brokerage Recommendation Trends for U
Check price target & stock forecast for Unity Software here>>>
While the ABR calls for buying Unity Software, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is U Worth Investing In?In terms of earnings estimate revisions for Unity Software, the Zacks Consensus Estimate for the current year has increased 5.6% over the past month to $1.03.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Unity Software. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Unity Software may serve as a useful guide for investors.
The second quarter of 2026 is expected to have extended the artificial intelligence buildout that has become the defining catalyst for Internet stocks, with monetization trends, cloud demand and agentic commerce infrastructure likely driving sentiment more than any single quarter's headline numbers. Hyperscalers entered the quarter with aggressive spending commitments already firmly in place, setting up an environment where the real test was whether that enormous spending was translating into durable, visible revenue growth.
Drawing on our proprietary research and market insight, we’ve identified four Internet stocks — Block (XYZ - Free Report) , Unity Software (U - Free Report) , Amazon (AMZN - Free Report) and Arista Networks (ANET - Free Report) — that appear well-positioned to beat earnings estimates this season.
AI Capex and Cloud MomentumCombined 2026 capital expenditure plans from Amazon, Alphabet, Meta and Microsoft stood at roughly $720-$725 billion, up sharply from the prior year, and were expected to keep flowing into the second quarter as demand for compute continued outpacing supply. Alphabet's $180-$190 billion full-year capex outlook, tied to accelerating Google Cloud demand, is expected to have supported continued double-digit cloud growth through the quarter. Microsoft's Azure momentum and a rapidly expanding annualized AI revenue run rate were likewise expected to carry into the second quarter, alongside a $625 billion commercial bookings backlog signaling durable enterprise AI commitments. Amazon Web Services, coming off its fastest growth in 15 quarters, was projected to keep accelerating on rising Bedrock adoption and a swelling order backlog. Meta's widened $125-$145 billion capex guidance and the newly debuted Muse Spark foundation model pointed to a consumer AI push expected to intensify through the quarter, even as Reality Labs losses continued to weigh on margins.
Digital Advertising and Agentic CommerceAdvertising is expected to have remained the sector's most dependable growth driver in the second quarter, with Gemini integrations across Search continuing to lift ad conversion and Amazon's Rufus AI shopping prompts and connected TV inventory projected to sustain double-digit advertising growth. A newer theme is expected to have gained real traction as the quarter progressed: agentic commerce. Google's AI Mode, already reaching roughly one billion monthly users, and its Universal Commerce Protocol, drawing participation from Shopify, Etsy, Walmart, Visa and Stripe, positioned AI assistants to begin transacting directly with merchants. Analysts increasingly framed agentic shopping as a large multi-trillion-dollar opportunity by 2030, a trend expected to gather momentum through the second quarter and beyond.
Sentiment entering the quarter is expected to stay selective, rewarding strong cloud results while penalizing heavy infrastructure spending without matching revenue proof. A reported delay to Alphabet's Gemini 3.5 Pro model briefly unsettled sentiment during the quarter and drew securities-law scrutiny, underscoring how closely investors were tracking AI model execution alongside spending. Even so, steadily expanding enterprise cloud backlogs, accelerating ad yields and steady consumer engagement are expected to keep the broader narrative constructive as the quarter progressed toward actual second-quarter earnings, due from Alphabet, Microsoft, Meta and Amazon across late July.
Taken together, the second quarter suggested the Internet sector is moving past the "is AI real" debate into a phase focused on monetization discipline and agentic commerce infrastructure. With advertising resilient and AI-native shopping scaling toward mainstream adoption, Internet stocks appear positioned to sustain momentum into third-quarter earnings, provided the industry's infrastructure bet keeps converting into durable revenue growth.
How to Make the Right Pick?With the presence of several industry participants, finding the right software stocks with the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes this task fairly simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.
Best BetsGiven below are four Internet stocks that have the favorable combination to beat on earnings this reporting cycle:
Block is scheduled to report second-quarter 2026 results on Aug. 5. Management guided to roughly $3.04 billion in gross profit, $740 million in adjusted operating income, and 86 cents adjusted EPS, alongside a raised full-year outlook reflecting broadening momentum across Cash App and Square. In April, Block expanded its global Uber partnership, extending Square's native Uber Eats integration internationally while launching Cash App Pay across Uber platforms in the United States, widening merchant and consumer reach. Through May and June, AI tools including MoneyBot and ManagerBot scaled toward full seller rollout, while Square Financial Services introduced high-yield savings for sellers. New commerce wins with Sherwin-Williams, Sofive and Ladurée Canada further validate Square's platform, reinforcing durable, multi-pronged ecosystem expansion heading into the quarter.
The Zacks Consensus Estimate for second-quarter earnings has remained steady at 86 cents per share in the past 30 days. The company currently has an Earnings ESP of +0.23% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Unity Software is scheduled to report second-quarter 2026 results on Aug. 6. Unity Software's growth path into the second quarter looks encouraging, anchored in a reshaped, higher-margin business. April's extended multi-year partnership with Meta strengthens Unity Software's grip on VR development tools, while the planned sunset of the ironSource Ads Network signals continued portfolio discipline. May brought Bernard Kim's board appointment, adding gaming-platform leadership experience, alongside management's guidance for strategic revenue growth of 29-32% year over year, with Strategic Grow accelerating 50-52% on Vector's momentum. Management targets Vector exiting 2026 at an annualized run rate above $1 billion. June's rollout of direct-to-consumer capabilities within Unity IAP broadens developer monetization options. With cash reserves of $2.15 billion and disciplined spending, these developments support management's outlook for GAAP profitability by year-end, underscoring continued positive momentum heading into the quarter.
The Zacks Consensus Estimate for second-quarter earnings has remained steady at 24 cents per share in the past 30 days. The company currently has an Earnings ESP of +2.74% and sports a Zacks Rank #1.
Amazon is set to report second-quarter 2026 results on July 30. The company’s second-quarter momentum is likely to have been shaped by an expanding artificial-intelligence and retail ecosystem. AWS entered the quarter carrying strong customer demand for Trainium chips, reinforced by Anthropic's April commitment to secure up to five gigawatts of current and future generations of Trainium capacity, alongside expanded NVIDIA GPU deployments and a Cerebras inference collaboration. In May, the company unified Rufus and Alexa+ into Alexa for Shopping, extending agentic commerce across its U.S. customer base without requiring Prime membership. June brought Prime Day across 26 countries, with record same-day and next-day delivery speeds, plus AWS' "What's Next" event introducing Amazon Quick and Bedrock Managed Agents built with OpenAI. Together, these developments point to broadening cloud, AI and retail engagement supporting continued growth.
The Zacks Consensus Estimate for second-quarter earnings has remained steady at $1.82 per share in the past 30 days. The company currently has an Earnings ESP of +0.16% and a Zacks Rank #2.
Arista Networks is scheduled to report second-quarter 2026 results on Aug. 4. The company is expected to have benefited from broadening structural demand for AI networking infrastructure. Management guided second-quarter revenues to approximately $2.8 billion, with a non-GAAP operating margin of 46-47% and non-GAAP EPS near 88 cents, signaling sustained momentum into the AI supersystem era. In May, the company raised its full-year 2026 revenue outlook to $11.5 billion and lifted its AI networking target to $3.5 billion, reflecting confidence in widening hyperscaler and enterprise adoption. April's investor engagement calendar reinforced visibility into this expanding pipeline. In June, Arista unveiled the 7060XE7 Series, extending its Etherlink portfolio with 1.6-terabit platforms built for rack-scale AI fabrics. Alongside a 2026 Net Promoter Score of 89, these developments support a constructive outlook for continued AI-led networking expansion.
The Zacks Consensus Estimate for earnings has moved north by 1.1% to 89 cents per share in the past 30 days. The company currently has an Earnings ESP of +3.08% and a Zacks Rank #2.
Amova Asset Management Americas Inc. reduced its stake in shares of Unity Software Inc. (NYSE:U – Free Report) by 40.6% in the first quarter, according to its most recent filing with the SEC. The fund owned 1,111,451 shares of the company’s stock after selling 760,324 shares during the period. Amova Asset Management Americas Inc. owned approximately 0.25% of Unity Software worth $24,396,000 as of its most recent SEC filing.
Other hedge funds and other institutional investors also recently added to or reduced their stakes in the company. Vanguard Group Inc. grew its holdings in shares of Unity Software by 2.9% during the 4th quarter. Vanguard Group Inc. now owns 35,553,296 shares of the company’s stock valued at $1,570,389,000 after purchasing an additional 996,685 shares during the last quarter. Wellington Management Group LLP increased its holdings in shares of Unity Software by 58.7% in the third quarter. Wellington Management Group LLP now owns 18,213,875 shares of the company’s stock worth $729,284,000 after buying an additional 6,734,285 shares during the period. Geode Capital Management LLC lifted its stake in shares of Unity Software by 5.9% in the 4th quarter. Geode Capital Management LLC now owns 5,852,047 shares of the company’s stock valued at $258,547,000 after acquiring an additional 328,595 shares during the last quarter. Norges Bank bought a new stake in shares of Unity Software in the 4th quarter valued at about $230,285,000. Finally, Ameriprise Financial Inc. boosted its holdings in Unity Software by 37.8% during the 2nd quarter. Ameriprise Financial Inc. now owns 4,628,328 shares of the company’s stock valued at $112,006,000 after acquiring an additional 1,270,798 shares during the period. 73.46% of the stock is currently owned by hedge funds and other institutional investors.
Insider Activity In other Unity Software news, SVP Rebecca Berenice Boyden sold 952 shares of Unity Software stock in a transaction dated Tuesday, May 26th. The shares were sold at an average price of $27.20, for a total value of $25,894.40. Following the completion of the transaction, the senior vice president directly owned 309,445 shares of the company’s stock, valued at approximately $8,416,904. The trade was a 0.31% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Matthew S. Bromberg sold 138,993 shares of the company’s stock in a transaction that occurred on Tuesday, May 26th. The stock was sold at an average price of $27.18, for a total transaction of $3,777,829.74. Following the completion of the transaction, the chief executive officer owned 1,557,514 shares in the company, valued at approximately $42,333,230.52. This represents a 8.19% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last three months, insiders sold 198,321 shares of company stock valued at $5,390,783. 0.77% of the stock is currently owned by insiders.
Unity Software Stock Performance Shares of U opened at $29.85 on Tuesday. The company has a quick ratio of 1.95, a current ratio of 1.95 and a debt-to-equity ratio of 0.56. The stock has a market cap of $13.03 billion, a P/E ratio of -19.01, a P/E/G ratio of 3.51 and a beta of 2.05. The business’s 50 day moving average price is $28.44 and its 200-day moving average price is $27.68. Unity Software Inc. has a 52 week low of $16.78 and a 52 week high of $52.15.
Analysts Set New Price Targets Several brokerages recently commented on U. Citigroup decreased their target price on shares of Unity Software from $43.00 to $40.00 and set a “buy” rating on the stock in a research note on Thursday, April 30th. Wall Street Zen cut shares of Unity Software from a “buy” rating to a “hold” rating in a research report on Saturday, March 28th. Wedbush raised their price target on shares of Unity Software from $30.00 to $32.00 and gave the stock an “outperform” rating in a report on Friday, May 8th. Citizens Jmp reiterated a “market outperform” rating and set a $37.00 target price on shares of Unity Software in a report on Friday, March 27th. Finally, Barclays boosted their target price on Unity Software from $28.00 to $33.00 and gave the company an “equal weight” rating in a research note on Friday, May 8th. Two analysts have rated the stock with a Strong Buy rating, twelve have given a Buy rating, eight have issued a Hold rating and one has assigned a Sell rating to the company’s stock. According to data from MarketBeat, Unity Software currently has a consensus rating of “Moderate Buy” and a consensus price target of $37.77.
Read Our Latest Stock Analysis on U
Unity Software Company Profile (Free Report)
Unity Software is a leading provider of a real-time 3D development platform that enables creators across industries to design, build and operate interactive, real-time experiences. Originally focused on the game development market, Unity’s technology now extends into sectors such as film, automotive, architecture, engineering and construction, delivering immersive content for mobile, desktop, console, augmented reality and virtual reality devices. The company’s core offering comprises a suite of authoring tools, runtime engines and cloud services that streamline the creation and deployment of interactive 3D applications.
The Unity Editor serves as the central hub where developers design scenes, script behavior and iterate on assets.
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Today at Unite Seoul, Unity (NYSE: U) announced plans for Unity 7, the next generation authoring platform for developing, deploying, and growing games.Game crea
SEOUL, South Korea--(BUSINESS WIRE)---- $U--Today at Unite Seoul, Unity (NYSE: U) announced plans for Unity 7, the next generation authoring platform for developing, deploying, and growing games.Game creation has evolved, with teams of creators and coding agents now working side by side across every part of the craft. Unity 7 is built for that world, designed as an open, collaborative platform where developers, artists, producers, and coding agents can work together across the full development lifecycl.
Unity Software Inc. (U - Free Report) ended the recent trading session at $31.27, demonstrating a -1.51% change from the preceding day's closing price. This move lagged the S&P 500's daily gain of 0.38%. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, added 0.62%.
Coming into today, shares of the company had gained 13.15% in the past month. In that same time, the Computer and Technology sector lost 0.53%, while the S&P 500 gained 1.61%.
The investment community will be paying close attention to the earnings performance of Unity Software Inc. in its upcoming release. The company is slated to reveal its earnings on August 6, 2026. It is anticipated that the company will report an EPS of $0.24, marking a 192.31% rise compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly revenue of $510.89 million, up 15.86% from the year-ago period.
For the full year, the Zacks Consensus Estimates project earnings of $1.03 per share and a revenue of $2.11 billion, demonstrating changes of +19.77% and +14.14%, respectively, from the preceding year.
It's also important for investors to be aware of any recent modifications to analyst estimates for Unity Software Inc. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, there's been a 5.65% rise in the Zacks Consensus EPS estimate. As of now, Unity Software Inc. holds a Zacks Rank of #1 (Strong Buy).
Valuation is also important, so investors should note that Unity Software Inc. has a Forward P/E ratio of 30.73 right now. This expresses a premium compared to the average Forward P/E of 19.89 of its industry.
We can additionally observe that U currently boasts a PEG ratio of 1.29. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The average PEG ratio for the Internet - Software industry stood at 1.06 at the close of the market yesterday.
The Internet - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 92, positioning it in the top 38% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
Unity Software (NYSE:U | U Price Prediction) occupies a curious intersection: a strategic asset with a depressed valuation. Shares closed most recently at $30.68, down 30.5% year to date, giving the company a market cap of roughly $13.4 billion. Yet the underlying business is accelerating: Q1 2026 revenue reached $508.24 million, up 16.8% year over year, and Vector, the AI ad engine, was 80% larger than a year ago.
CEO Matt Bromberg was blunt on the Q1 call: “There is no company in the world better positioned to win in this marketplace than we are.” CFO Jarrod Yahes added that “there is a high threshold as we evaluate M&A opportunities.” Unity has signaled discipline on M&A, yet the assets, the Unity 6 engine, Unity Runtime behavioral data, Vector, and roughly 70% mobile game creation market share, make it a magnet for larger platforms.
4. Apple: The Longest Shot Apple (NASDAQ:AAPL), at a $317.31 share price and a $4.7 trillion market cap, has the cash. Vision Pro needs 3D content. But Apple prefers acqui-hires (i.e., buying a business primarily to recruit its talented employees), not $13 billion platform deals, and Unity’s ad business would clash with Apple’s privacy stance. Despite a strategic fit, cultural and regulatory friction dwarfs any strategic fit.
3. Microsoft: Regulatory Baggage Microsoft (NASDAQ:MSFT) has the financial firepower ($2.9 trillion market cap, 46.3% operating margin) and gaming rationale via Xbox. Satya Nadella’s $37 billion AI run rate gives him ad-tech logic too. Post-Activision antitrust scrutiny makes another mega gaming deal a slog.
2. Sony: The Natural Fit Sony (NYSE:SONY) is the intuitive buyer: PlayStation runs on developers who overwhelmingly use Unity. At a $20.68 share price, Sony has a $121.4 billion market cap, and its ¥500 billion buyback signals capital discipline. The obstacle is that swallowing a $13 billion U.S. software firm would be outside Sony’s typical M&A comfort zone.
1. Nvidia: The Strongest Case Nvidia (NASDAQ:NVDA) fits best. Omniverse, Isaac GR00T, and DRIVE Hyperion all need a real-time 3D engine and developer network. Nvidia’s $4.9 trillion market cap and 63% profit margin mean Unity represents a rounding error on Nvidia’s balance sheet. Jensen Huang says, “Agentic AI has arrived,” and Unity Runtime’s behavioral data would supercharge simulation and robotics training. Antitrust risk is lower than Microsoft’s, and the industrial logic is highest. (For readers tracking this theme, 24/7 Wall St.’s Next Nvidia Playbook report frames the broader compute-plus-content stack.)
Where Private Equity Fits A Thoma Bravo-style buyer could absorb Unity’s $403.9 million FY25 free cash flow and compress margins. But $2.15 billion in cash combined with a $2.24 billion convertible note stack complicates LBO math. PE ranks below Nvidia and Sony, roughly level with Microsoft, and ahead of Apple.
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Stock to Watch: Unity Software Inc. (U - Free Report) Unity Software Inc. provides a platform to develop, deploy and grow games and interactive 3D experiences across mobile, PC, console and extended reality. Its software supports creators through the full content lifecycle, including prototyping, real-time rendering, live operations, user acquisition and monetization. San Francisco, CA-based Unity markets solutions globally through direct and indirect channels with field sales in North America, China, France, the United Kingdom, Israel, Japan and South Korea.
U is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Computer and Technology stock. U has a Momentum Style Score of B, and shares are up 15.1% over the past four weeks.
One analyst revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.03 to $1.03 per share. U boasts an average earnings surprise of +7.4%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, U should be on investors' short list.
Unity Software stock is among today’s top performers. Why is U stock up today? The 200-Day Line: Where Optimism Meets The MathThe stock has been on a steady climb off its April swing low and is now comfortably positioned above its 20-day, 50-day and 100-day moving averages sitting at $28.43, $28.02 and $24.57 respectively with the 20-day above the 50-day a near-term bullish alignment. The remaining obstacle is the 200-day moving average at $32.08 where the stock is still about 2.3% shy of reclaiming a level that would signal a more complete trend repair.
A death cross that formed in March with the 50-day crossing below the 200-day remains a longer-term caution flag and until price can push through and hold above the 200-day that structural overhang stays in play.
Momentum is constructive. MACD is above its signal line with a positive histogram suggesting the recent leg higher still has some energy behind it and that sellers are gradually losing their grip. Benzinga Edge assigns the stock a momentum score of 43.59 placing it in an improving but not yet high-conviction range relative to the broader market. The setup is better described as a recovery in progress than a confirmed breakout.
June produced the most recent swing high making the current push an important test of whether the stock can build a higher high or stall and roll back into its prior range. Unity is outperforming the technology sector by roughly 2.19 percentage points today a gap that carries more weight given that technology is the worst performing sector on the session ranked last out of eleven groups.
Key Resistance: $32.50 — a pivot zone just above the 200-day moving average where prior rebounds have lost steam and sellers tend to reappear Key Support: $25.50 — a demand area near the spring breakdown zone where buyers stepped in during the April low and are likely to defend again on any pullback What Analysts Are Saying About UThe stock carries a consensus Buy rating with an average price target of $35.73 across 38 analysts spanning a range from $21.00 on the low end to $52.00 at the high end. The next major fundamental test arrives August 6 when the company reports earnings with analysts projecting 22 cents per share on revenue of $513.64 million both representing meaningful improvement from the year-ago period.
Wells Fargo: Overweight (Raises Target to $36.00) (July 7) Raymond James: Initiated with Market Perform (June 29) Piper Sandler: Overweight (Raises Target to $40.00) (June 2) U Shares Are LiftingU Price Action: Unity shares were up 1.07% at $31.06 at the time of publication on Friday, according to Benzinga Pro.
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SAN FRANCISCO--(BUSINESS WIRE)--Unity (NYSE: U) announced today it will release second quarter 2026 financial results before the market opens on August 5, 2026, with a webcast to follow at 8:30 a.m. ET/5:30 a.m. PT.
The webcast and financial results will be accessible at investors.unity.com. A replay of the webcast will also be available on Unity’s Investor Relations website.
About Unity Software Inc. (Unity)
Unity [NYSE: U] offers a suite of tools to develop, deploy, and grow games and interactive experiences across all major platforms from mobile, PC, and console, to extended reality (XR). For more information, visit Unity.com.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Unity Software (NYSE:U | U Price Prediction) is trying to reinvent itself as an AI advertising platform, and the numbers are starting to back the pitch. The question is whether the company can close the yawning profitability gap with the AI ad-tech leader before the market’s patience runs out.
The Vector Bet Is Working Unity reported Q1 2026 revenue of $508.24 million, up 16.84% year over year, with Grow Solutions climbing 24% to $352 million. Adjusted EBITDA margin expanded to 27%, up from 19% a year ago, and free cash flow jumped to $66.46 million from $7.31 million.
The engine behind that is Unity Vector, the AI ad platform that uses behavioral data from Unity Runtime. It reached 56% of Grow Solutions revenue in Q4 2025 after three straight quarters of mid-teen sequential growth. CEO Matt Bromberg told investors, "We are delivering exceptional revenue growth and margin expansion while executing on the most exciting product roadmap in Unity’s history."
Management is cleaning house to focus on Vector. Unity took $279 million in impairment charges tied to the April 30, 2026 sunset of the ironSource Ads Network and a planned Supersonic divestiture, contributing to a $347 million GAAP net loss. Q2 guidance calls for strategic Grow revenue of $302M to $306M, up 50% to 52% YoY, with GAAP profitability targeted for Q4 2026.
The AppLovin Benchmark AppLovin (NASDAQ:APP) shows what a mature AI ad platform can produce. Q1 2026 revenue was $1.84 billion at an 85% adjusted EBITDA margin, with operating margin of 78% and net margin of 65%. Its AXON 2 engine has driven consistent 1 to 2 percentage point quarterly margin expansion. AppLovin shares are up 56.86% over the past year to $527.06, versus Unity at $29.32, down 33.62% year to date.
Roblox and the Platform Question Roblox (NYSE:RBLX) is the adjacent AI-gaming ecosystem risk, growing Q1 2026 revenue 39.3% to $1.44 billion with 132 million DAUs. Podcast commentary on Unity’s engine business framed the stakes plainly: "their newish launch of Vector, their new ad tech product, does seem to be turning things around. And there is very noticeable revenue momentum here." But the same analysis warned Unity and Unreal "have a lot of work to do in order to be more compatible with AI native workflows," opening the door for Godot, Replit, and middleware startups.
What to Watch Analyst consensus sits at $35.28, with 17 buys and 9 holds. Unity is an active recommendation in Eric Bleeker’s AI Investor Portfolio. The tell will be Q4 2026: hitting GAAP profitability while Vector keeps compounding would validate the pivot. Missing it, with $2.24 billion in convertible notes outstanding, would reopen every old question about the story.
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When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Unity Software Inc. (U - Free Report) .
Unity Software currently has an average brokerage recommendation (ABR) of 1.81, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 26 brokerage firms. An ABR of 1.81 approximates between Strong Buy and Buy.
Of the 26 recommendations that derive the current ABR, 15 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 57.7% and 3.9% of all recommendations.
Brokerage Recommendation Trends for U
Check price target & stock forecast for Unity Software here>>>
While the ABR calls for buying Unity Software, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Is U a Good Investment?Looking at the earnings estimate revisions for Unity Software, the Zacks Consensus Estimate for the current year has increased 5.6% over the past month to $1.03.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Unity Software. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Unity Software may serve as a useful guide for investors.
Unity Software Inc. (U - Free Report) ended the recent trading session at $27.14, demonstrating a -1.24% change from the preceding day's closing price. This change lagged the S&P 500's daily loss of 0.37%. Elsewhere, the Dow saw an upswing of 0.29%, while the tech-heavy Nasdaq depreciated by 1.33%.
Shares of the company witnessed a gain of 7.47% over the previous month, beating the performance of the Computer and Technology sector with its gain of 4.52%, and the S&P 500's gain of 2.02%.
The upcoming earnings release of Unity Software Inc. will be of great interest to investors. The company's earnings per share (EPS) are projected to be $0.24, reflecting a 192.31% increase from the same quarter last year. Alongside, our most recent consensus estimate is anticipating revenue of $511.01 million, indicating a 15.89% upward movement from the same quarter last year.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $1.03 per share and revenue of $2.11 billion, indicating changes of +19.77% and +13.88%, respectively, compared to the previous year.
Investors should also take note of any recent adjustments to analyst estimates for Unity Software Inc. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Unity Software Inc. is holding a Zacks Rank of #2 (Buy) right now.
Looking at its valuation, Unity Software Inc. is holding a Forward P/E ratio of 26.78. This represents a premium compared to its industry average Forward P/E of 18.33.
Also, we should mention that U has a PEG ratio of 1.12. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 0.99 based on yesterday's closing prices.
The Internet - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 84, positioning it in the top 35% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.
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What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreGrowth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.
Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +24% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Unity Software Inc. (U - Free Report) Unity Software Inc. provides a platform to develop, deploy and grow games and interactive 3D experiences across mobile, PC, console and extended reality. Its software supports creators through the full content lifecycle, including prototyping, real-time rendering, live operations, user acquisition and monetization. San Francisco, CA-based Unity markets solutions globally through direct and indirect channels with field sales in North America, China, France, the United Kingdom, Israel, Japan and South Korea.
U is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Computer and Technology stock. U has a Momentum Style Score of B, and shares are up 6.3% over the past four weeks.
Three analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.04 to $1.03 per share. U also boasts an average earnings surprise of +7.4%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, U should be on investors' short list.
In the latest close session, Unity Software Inc. (U - Free Report) was up +1.98% at $27.24. The stock exceeded the S&P 500, which registered a gain of 0.5% for the day. On the other hand, the Dow registered a gain of 0.7%, and the technology-centric Nasdaq increased by 0.31%.
The company's shares have seen a decrease of 2.09% over the last month, not keeping up with the Computer and Technology sector's loss of 0.42% and the S&P 500's loss of 0.23%.
The investment community will be paying close attention to the earnings performance of Unity Software Inc. in its upcoming release. The company is forecasted to report an EPS of $0.24, showcasing a 192.31% upward movement from the corresponding quarter of the prior year. Meanwhile, the latest consensus estimate predicts the revenue to be $511.01 million, indicating a 15.89% increase compared to the same quarter of the previous year.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $1.03 per share and revenue of $2.11 billion. These totals would mark changes of +19.77% and +13.88%, respectively, from last year.
Investors should also take note of any recent adjustments to analyst estimates for Unity Software Inc. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Unity Software Inc. currently has a Zacks Rank of #2 (Buy).
Investors should also note Unity Software Inc.'s current valuation metrics, including its Forward P/E ratio of 26.03. This expresses a premium compared to the average Forward P/E of 18.49 of its industry.
We can additionally observe that U currently boasts a PEG ratio of 1.09. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As of the close of trade yesterday, the Internet - Software industry held an average PEG ratio of 1.01.
The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 85, putting it in the top 35% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
Unity Software Inc. (U - Free Report) came out with quarterly earnings of $0.23 per share, missing the Zacks Consensus Estimate of $0.24 per share. This compares to a loss of $0.19 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -2.13%. A quarter ago, it was expected that this company would post earnings of $0.2 per share when it actually produced earnings of $0.24, delivering a surprise of +20%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Unity Software, which belongs to the Zacks Internet - Software industry, posted revenues of $508.24 million for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 1.53%. This compares to year-ago revenues of $435 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Unity Software shares have lost about 38.2% since the beginning of the year versus the S&P 500's gain of 7.6%.
What's Next for Unity Software?While Unity Software has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Unity Software was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $506.68 million in revenues for the coming quarter and $0.99 on $2.09 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, Monday.com (MNDY - Free Report) , has yet to report results for the quarter ended March 2026. The results are expected to be released on May 11.
This project management software developer is expected to post quarterly earnings of $0.96 per share in its upcoming report, which represents a year-over-year change of -12.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
Monday.com's revenues are expected to be $338.9 million, up 20.1% from the year-ago quarter.
Shares of Snowflake (NYSE:SNOW | SNOW Price Prediction) are climbing in early Thursday trading, jumping roughly 9% intraday to around $152. The data cloud platform is leading enterprise software higher and outpacing peer ServiceNow (NYSE:NOW), which is also green but rising at a slower clip.
ServiceNow stock is trading 5% higher to around $94, a respectable bounce in its own right. On a percentage basis, however, Snowflake is clearly out in front today, and the gap matters given how often these two names trade together.
Both stocks are widely watched bellwethers for enterprise software sentiment. Snowflake’s market cap sits at roughly $53.09 billion, while ServiceNow’s is closer to $97.63 billion as of mid-morning Thursday.
The contrast deserves attention because both names have been hammered in 2026. Snowflake stock entered Thursday down 36% year to date, while ServiceNow shares were sitting down 42% year to date through Wednesday’s close. Today’s tape hints at a partial sentiment thaw across the cloud software group.
Snowflake Pulls Ahead in a Brutal Cloud Tape The pop has no single confirmed catalyst, but the backdrop has been building for weeks. Bargain-hunting in heavily sold-down cloud names, AI workload migration narratives favoring data platforms, and a broader rotation back toward software are all in the mix. Snowflake’s pitch as the data layer for enterprise AI keeps attracting buyers whenever sentiment thaws.
The fundamentals have held up. In Q4 FY2026, reported February 25, Snowflake posted product revenue of $1.23 billion, up 30% year over year, and remaining performance obligations of $9.77 billion, up 42%. The company added a record 740 net new customers, and free cash flow surged to $765 million at a 60% margin.
CEO Sridhar Ramaswamy has leaned hard into AI positioning, with over 9,100 accounts using Snowflake AI features and Cortex adoption climbing. Snowflake Intelligence reached approximately 2,500 accounts within three months of launch. For investors hunting a recovery candidate inside a sold-off group, that growth profile remains the fastest among major data platforms.
ServiceNow Climbs Too, but at a Slower Clip ServiceNow’s gain looks more like a sympathy move than a standalone breakout. The workflow automation leader reported Q4 FY2025 revenue of $3.57 billion, up about 21% year over year, with cRPO of $12.85 billion, up 25%. Yet the stock dropped sharply after that earnings report as investors fretted about SaaS demand displacement from AI agents.
Sentiment has slowly recovered. Bernstein recently lifted its ServiceNow price target to $236 with a mixed read coming out of the company’s Analyst Day. You can find more in our ServiceNow analyst day coverage, which captures why the bulls and bears are still split on the name.
ServiceNow CEO Bill McDermott has framed the company as “the AI control tower for business reinvention.” Today’s tape suggests fast money is rotating into faster-growing data platforms first. Over the past month, NOW shares are still down 6.5% versus a 2% gain for SNOW stock, reinforcing the relative-strength story.
Meanwhile, sector-adjacent stocks Unity Software (NYSE:U) and Adobe (NASDAQ:ADBE) are both up 3% today.
What to Watch Next One green session doesn’t reverse a brutal year for cloud software. The bear case is straightforward: multiples can keep compressing if AI capex pressures customer software budgets, and both names remain deeply negative on the year.
The bull case is that washed-out positioning, durable RPO growth, and AI-linked product cycles are finally pulling in real capital. Snowflake’s FY2027 product revenue guide of $5.66 billion and ServiceNow’s FY2026 subscription guide of $15.53 billion to $15.57 billion both imply growth in the 20% range. That floor on top-line momentum is what the bulls keep pointing to.
So yes, Snowflake is outperforming ServiceNow today and on a year-to-date basis, even with both stocks in the red. Watch for whether SNOW shares hold their intraday gains into the close and whether NOW stock can string together consecutive up days. Prudent investors should size positions carefully given how violently this group has traded in 2026.
Unity Software Inc (NYSE:U) beat Q1 revenue estimates and posted a sharp jump in adjusted earnings but took a $279 million impairment charge related to shutting down its ironSource ad network and selling off its Supersonic game publishing unit.
The San Francisco-based company posted revenue of $508 million for the quarter ended March 31, up 17% from a year earlier and slightly above the $506 million analysts had forecast.
Adjusted EBITDA surged 65% year-over-year to $138 million, though gross margin of 82% came in below the 82.8% consensus estimate. Earnings per share of $0.23 matched expectations but fell 4% from the prior-year period.
Unity's Grow Solutions segment, which houses its advertising and monetization tools, led the quarter with revenue of $352 million, up 24% year-over-year. Create Solutions, which includes the company's core development engine, generated $157 million, a more modest 4% gain.
The company officially shuttered its ironSource Ad Network at the end of April and said it intends to divest the Supersonic game publishing business. The $279 million in impairment charges recorded in the quarter reflect the financial impact of both decisions.
For the second quarter, Unity guided for revenue of $505 million to $515 million, bracketing the $512 million analyst consensus, representing year-over-year growth of 15% to 17%. Adjusted EBITDA is expected in the range of $130 million to $135 million, implying growth of 44% to 49% from a year ago.
The company also provided a breakdown of its "Strategic Revenue" category for Q2, projecting $455 million to $465 million, with Strategic Grow Revenue, its key growth engine, seen rising 50% to 52% year-over-year to $302 million to $306 million.
Unity said it expects to reach GAAP profitability by the fourth quarter of 2026.
Shares of Unity initially jumped more than 7% in premarket trading following the results but reversed course during the morning session, last trading down more than 2%.
AI-powered Unity Vector has driven a +49% YoY surge in Grow revenues through improved ROAS, allowing them to sustain U's strong ad-tech growth prospects through new capabilities. Unity AI, an agentic AI game development capability has also been launched, allowing them incrementally cross sell to existing/new game developer base. U's renewed gaming/ad-tech growth prospects, fueled by AI integration and the outsized FQ1'26 performance metrics, have lent credibility to the promising FQ2'26 guidance.
Key Takeaways Unity reported Q1 revenues of $508.2M, up 17% YoY, beating guidance despite a slight EPS miss.U saw 35% Strategic Revenue growth, driven by Unity Ad Network and Vector momentum.U booked $279M impairment charges tied to ironSource sunset and Supersonic divestiture plans. Unity Software (U - Free Report) reported first-quarter 2026 non-GAAP earnings per share (EPS) of 23 cents compared with 24 cents in the year-ago quarter. The figure missed the Zacks Consensus Estimate by 4.17%.
On a GAAP basis, the company posted a net loss per share of 80 cents compared with a loss of 19 cents in the year-ago quarter, weighed down by $279 million of impairment charges related to the sunset of the ironSource Ads Network and the planned divestiture of the Supersonic publishing business.
Net revenues of $508.24 million rose 17% year over year and comfortably exceeded the company's guided range of $480-$490 million. The figure beat the consensus mark by 1.53%.
Total Strategic Revenue, which excludes the ironSource Ads Network and Supersonic, grew 35% year over year to $432 million. The revenue growth was driven by the Unity Ad Network, propelled by Unity Vector, with additional contribution from higher subscription revenues in Create.
Q1 Details of Unity SoftwareUnity Software reported Create Solutions revenues of $157 million, up 4% year over year. The increase was driven by higher subscription revenues, partially offset by declines in cloud and hosting services revenues tied to the company's portfolio reset in 2025. Strategic Create Revenue (which excludes non-strategic items) was $153.7 million, up 15% year over year.
Grow Solutions revenues were $352 million, up 24% year over year. The growth was driven by Unity Vector within the Unity Ad Network, partially offset by declines in the IronSource Ad Network. Strategic Grow Revenue was $278.7 million, up 49% year over year, almost twice the rate of total Grow growth — reflecting Vector's continuing momentum. Per the March 26, 2026, preliminary release, Unity Vector increased 15% sequentially in the first quarter, marking its fourth consecutive quarter of mid-teens sequential growth.
Non-Strategic Revenue, consisting primarily of the ironSource Ads Network and Supersonic, was $75.8 million, down 34% year over year.
Operating Details of UnityIn the first quarter, non-GAAP gross profit increased 16.7% year over year to $419.1 million. Unity's adjusted gross margin of 82% was flat year over year.
Research & development expenses on an adjusted basis grew 8.7% year over year to $152.1 million. Adjusted R&D, as a percentage of revenues, contracted 200 basis points to 30%.
Sales and marketing expenses on an adjusted basis declined 2.3% year over year to $90.9 million. Adjusted S&M, as a percentage of revenues, contracted 300 basis points to 18%.
General & administrative expenses on an adjusted basis decreased 10.3% year over year to $37.9 million. Adjusted G&A, as a percentage of revenues, contracted 300 basis points to 7%.
Unity Software reported adjusted EBITDA of $138 million, up 64.7% year over year and well above the prior guidance of $105-$110 million. The company's adjusted EBITDA margin of 27% improved 800 basis points compared with the prior year, driven by higher revenues and continued cost control.
On a GAAP basis, the net loss for the quarter was $347 million, including the $279 million of impairment charges related to the ironSource Ads Network sunset and the planned Supersonic divestiture, compared with a net loss of $78 million in the year-ago quarter.
Unity Software's Balance Sheet & Cash FlowAs of March 31, 2026, Unity had cash, cash equivalents and restricted cash of $2.15 billion compared with $2.06 billion as of Dec. 31, 2025. The increase was primarily driven by operations.
Operating cash flow was $71 million in the reported quarter, up from $13 million reported in the year-ago quarter. Free cash flow during the quarter was $66 million compared with $7 million in the prior-year quarter. The current portion of convertible notes was $556.8 million as of March 31, 2026.
Significant Q1 DevelopmentsAlongside its first-quarter results, Unity Software announced the sunset of the ironSource Ads Network, effective April 30, 2026, and disclosed that it had engaged a financial advisor to assist with the divestiture of its Supersonic game publishing business. Management stated that, once completed, these actions are expected to drive faster revenue growth and higher adjusted EBITDA margins. The company also reiterated its expectation to become GAAP profitable by the fourth quarter of 2026.
Unity Software's Guidance for Q2 2026For the second quarter of 2026, Unity Software anticipates total revenues between $505 million and $515 million. Strategic Revenue is expected in the range of $455-$465 million, implying a rise of 29-32% year over year. Within that, Strategic Grow Revenue is expected between $302 million and $306 million, suggesting an increase of 50-52% year over year, and Strategic Create Revenue is guided in the range of $154-$158 million, indicating a rise of 11-14% year over year (excluding the impact of a $12 million one-time revenue item in the second quarter of 2025).
Adjusted EBITDA is expected in the range of $130-$135 million, indicating year-over-year growth of 44-49%.
Unity’s Zacks Rank & Stocks to ConsiderUnity currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Audioeye (AEYE - Free Report) , each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 53.3% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Applied Materials shares have gained 66.8% in the year-to-date period. Applied Materials is scheduled to report its second-quarter 2026 results on May 14.
Audioeye shares have lost 23.3% in the year-to-date period. Audioeye is set to report its first-quarter 2026 results on May 13.
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Let's take a look at what these Wall Street heavyweights have to say about Unity Software Inc. (U - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Unity Software currently has an average brokerage recommendation (ABR) of 1.79, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 24 brokerage firms. An ABR of 1.79 approximates between Strong Buy and Buy.
Of the 24 recommendations that derive the current ABR, 14 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 58.3% and 4.2% of all recommendations.
Brokerage Recommendation Trends for U
Check price target & stock forecast for Unity Software here>>>
While the ABR calls for buying Unity Software, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Should You Invest in U?Looking at the earnings estimate revisions for Unity Software, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $0.99.
Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Unity Software. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Unity Software.
Key Takeaways RBLX says January global age checks for chat access slowed DAU growth after prior surges.RBLX cut 2026 guidance to 20-25% revenue growth and 8-12% bookings as chat use fell.RBLX had 51% of DAUs age-checked; aims more than 90%, and will add global chat and preset messages. Roblox Corporation (RBLX - Free Report) is navigating a key investor concern as its safety-first platform changes create near-term friction in user growth, communication activity and bookings expectations. Management said DAU growth slowed from the roughly 70% rates seen in the prior two quarters, with user acquisition and engagement affected by the January rollout of global age checks for chat access.
The concern centers on how closely communication is tied to Roblox’s engagement model. Following the age-check rollout, users who had not completed verification lost access to chat, reducing the share of users communicating on the platform. Roblox also limited adult communication with users under 16, further weighing on communication density. Management noted that the impact extended beyond unverified users, as age-checked users also had fewer people available to interact with.
That friction is now reflected in the company’s revised outlook. Roblox stated that reduced communication activity, along with discovery algorithms that had leaned more toward monetization, likely hurt app store ratings and organic sign-ups. The company lowered its full-year guidance to revenue growth of 20-25% and bookings growth of 8-12%. It also expects DAUs to decline sequentially from the first quarter to the second quarter before returning to sequential growth in the third quarter.
Roblox is responding with product changes aimed at rebuilding communication density while keeping a safer platform framework intact. Management said 51% of global DAUs had completed age checks by quarter-end, with a long-term ambition to move that figure above 90%. Planned initiatives include global chat, in-game party chat integration and preset messages to support gameplay coordination. These updates are intended to restore social interaction without reversing the company’s safety objectives.
How Are Roblox’s Competitors Faring?Unity Software Inc. (U - Free Report) is benefiting from a different industry dynamic. Unity Software said 90% of game developers are already using AI in workflows, while newly published Made with Unity games increased 12% sequentially and new Unity sign-ups rose 20% quarter over quarter. Unity Software’s investor focus is therefore more tied to creator-tool adoption and monetization infrastructure, while Roblox is working through a safety-led reset in social engagement.
Take-Two Interactive Software, Inc. (TTWO - Free Report) remains more franchise-led, with growth supported by owned titles and recurrent consumer spending. Take-Two reported third-quarter net bookings of $1.76 billion and raised its fiscal-year net bookings outlook to $6.65-$6.7 billion, supported by NBA 2K, Grand Theft Auto and mobile titles. Compared with Roblox, Take-Two has less direct exposure to platform-level communication friction because its growth is driven more by premium franchises and live-service spending.
For Roblox, the key issue is whether safety enhancements can coexist with stronger organic user acquisition. A return to sequential DAU growth in the third quarter, along with improved communication density, would be important evidence that the safety reset is becoming a long-term platform advantage rather than a sustained drag on bookings.
RBLX’s Stock Price Performance, Valuation & EstimatesRoblox shares have declined 28.8% over the past three months compared with the industry’s fall of 2.5%.
RBLX Three-Month Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, RBLX trades at a forward 12-month price-to-sales (P/S) multiple of 3.72, well above the industry average of 2.13.
RBLX’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for RBLX’s 2026 earnings implies a year-over-year increase of 5.8%. Estimates for 2026 loss per share have narrowed in the past 30 days.
Image Source: Zacks Investment Research
EPS Trend of RBLX StockRoblox has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Unity Software Inc. (U - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Over the past month, shares of this company have returned +1.6%, compared to the Zacks S&P 500 composite's +4.6% change. During this period, the Zacks Internet - Software industry, which Unity Software falls in, has lost 4.8%. The key question now is: What could be the stock's future direction?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate RevisionsRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Unity Software is expected to post earnings of $0.22 per share for the current quarter, representing a year-over-year change of +184.6%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The consensus earnings estimate of $0.99 for the current fiscal year indicates a year-over-year change of +15.1%. This estimate has remained unchanged over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $1.22 indicates a change of +23.4% from what Unity Software is expected to report a year ago. Over the past month, the estimate has changed +1.1%.
With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Unity Software.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For Unity Software, the consensus sales estimate for the current quarter of $510.93 million indicates a year-over-year change of +15.9%. For the current and next fiscal years, $2.12 billion and $2.39 billion estimates indicate +14.6% and +12.8% changes, respectively.
Last Reported Results and Surprise HistoryUnity Software reported revenues of $508.24 million in the last reported quarter, representing a year-over-year change of +16.8%. EPS of $0.23 for the same period compares with -$0.19 a year ago.
Compared to the Zacks Consensus Estimate of $500.57 million, the reported revenues represent a surprise of +1.53%. The EPS surprise was -4.17%.
Over the last four quarters, Unity Software surpassed consensus EPS estimates two times. The company topped consensus revenue estimates each time over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Unity Software is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Unity Software. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
VICTORIA, Seychelles, May 25, 2026 (GLOBE NEWSWIRE) -- Bitget, the world’s largest Universal Exchange (UEX), has announced the addition of United Stables (U) for spot trading in the Stablecoin zone. Trading for the U/USDT pair opens on May 25, 2026, 08:00 (UTC), with withdrawals available from May 26, 2026, 09:00 (UTC).
United Stables is a decentralized stablecoin protocol on the BNB Chain designed to issue $U, a censorship-resistant, verifiable, and yield-bearing digital asset that bridges the gap between decentralized transparency and institutional stability. The platform addresses the structural fragmentation of the stablecoin market, specifically the trade-offs between centralized custodial risks and decentralized liquidity constraints, by utilizing a hybrid collateralization framework backed by a diversified basket of liquid cryptocurrencies and tokenized real-world assets (RWAs). This dual-reserve architecture mitigates systemic market volatility, while real-time, on-chain Proof of Reserves (PoR) oracles continuously verify collateralization levels to guarantee a transparent, secure 1:1 fiat peg.
The protocol transforms idle digital cash into productive capital without requiring manual staking or incurring additional gas expenditures by integrating automated, native yield distribution directly within the token mechanics. The ecosystem maximizes asset efficiency through programmable auto-compounding, generating sustainable returns sourced from short-term treasury bills and liquid staking derivatives. Consequently, the utility of $U extends beyond a standard medium of exchange into high-efficiency DeFi collateral, low-cost cross-border remittances, and stable base-trading pairs. Ultimately, United Stables establishes a highly resilient monetary infrastructure that enhances capital efficiency, lowers barriers to yield generation, and strengthens liquidity across the broader Web3 ecosystem.
Bitget’s Universal Exchange (UEX) combines exchange grade infrastructure with OnChain access, giving users a single account to discover and trade millions of tokens across leading networks. While this open gateway enables broad market access without traditional listing bottlenecks, Bitget’s listing highlights a different tier of assets—projects with real backing, clear utility, strong community and partner support. Together, UEX offers both breadth and quality: universal discovery at scale, and curated opportunities for users who prefer to explore crypto's vastness. The addition of United Stables (U) further enhances these opportunities, reinforcing Bitget’s role in bridging the gap between the transparency of decentralized finance and the stability of institutional-grade, yield-bearing digital assets.
For more details on United Stables (U), visit here.
About Bitget
Bitget is the world's largest Universal Exchange (UEX), serving over 125 million users and offering access to over 2M crypto tokens, 100+ tokenized stocks, ETFs, commodities, FX, and precious metals such as gold. The ecosystem is committed to helping users trade smarter with its AI agent, which co-pilots trade execution. Bitget is driving crypto adoption through strategic partnerships with LALIGA and MotoGP™. Aligned with its global impact strategy, Bitget has joined hands with UNICEF to support blockchain education for 1.1 million people by 2027. Bitget currently leads in the tokenized TradFi market, providing the industry's lowest fees and highest liquidity across 150 regions worldwide.
For more information, visit: Website | Twitter | Telegram | LinkedIn | Discord
Risk Warning: Digital asset prices are subject to fluctuation and may experience significant volatility. Investors are advised to only allocate funds they can afford to lose. The value of any investment may be impacted, and there is a possibility that financial objectives may not be met, nor the principal investment recovered. Independent financial advice should always be sought, and personal financial experience and standing carefully considered. Past performance is not a reliable indicator of future results. Bitget accepts no liability for any potential losses incurred. Nothing contained herein should be construed as financial advice. For further information, please refer to our Terms of Use.
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/2fa87f38-ceff-4757-afdd-f28067df17db
Key Takeaways Unity enters 2H26 with balanced growth as ad execution, margins, and liquidity improve.U's Vector platform drives 49% Grow revenue growth, boosting targeting and advertiser spending.Margin expansion, $66M free cash flow, and $2.14B cash support ongoing investments. Unity Software (U - Free Report) is entering the second-half of 2026 with a more balanced investment profile as improving advertising execution, expanding margins, and healthy liquidity support its long-term outlook. The company continues benefiting from stronger monetization within its Grow business, particularly through its Vector advertising platform, while ongoing restructuring efforts are helping stabilize profitability.
The stock has gained investor attention after Unity delivered stronger operating performance during recent quarters. However, valuation concerns and transition-related risks continue limiting the potential for a fully bullish investment thesis. Against this backdrop, Unity increasingly looks like a balanced growth story rather than an aggressive momentum play.
U Stock Outlook Anchored in Balanced Growth ProfileUnity’s long-term outlook remains neutral, with expectations that the stock will perform broadly in line with the market instead of significantly outperforming. The company’s improving fundamentals support stability, but restructuring noise and valuation concerns continue preventing a more directional bullish stance.
The investment case reflects strong Growth and Momentum characteristics offset by a weaker Value profile. Growth-oriented investors continue focusing on Unity’s improving ad monetization trends, while momentum indicators have strengthened alongside better profitability and free cash flow generation.
However, the stock does not appear deeply discounted relative to its operational and execution risks. That creates a setup where Unity looks suitable for investors seeking selective upside exposure instead of a high-conviction growth opportunity.
Unity Software Growth Powered by Vector Ad MomentumUnity’s Grow segment remains the company’s most important growth engine heading into 2026. The primary catalyst has been Vector, Unity’s machine-learning advertising platform, which continues improving targeting, prediction accuracy, and advertiser engagement.
Strategic Grow revenue increased 49% year over year during the first quarter of 2026, driven largely by continued strength within the Unity Ad Network. Management attributed the acceleration to product upgrades and improving campaign optimization tied to Vector.
A major operational improvement involved the rollout of Day-28 return-on-ad-spend optimization. Advertisers are seeing better long-term campaign visibility compared with earlier Day-7 optimization methods, resulting in stronger advertiser confidence and higher spending levels.
Management also guided for Strategic Grow revenue growth of 50-52% year over year during the second quarter of 2026, reinforcing expectations that momentum will remain healthy.
Longer term, Unity expects runtime behavioral data integration to strengthen advertising performance further by incorporating richer user signals into live production models.
The emphasis on advanced advertising intelligence mirrors broader monetization initiatives at Roblox, where engagement-driven advertising opportunities are becoming increasingly important.
U Financial Trends Show Margin Expansion and Cash StrengthUnity’s first-quarter 2026 results reflected meaningful profitability improvement. Adjusted EBITDA increased to $138 million, while adjusted EBITDA margin expanded to 27%, improving significantly from the prior-year period.
The company also demonstrated improving cost discipline across key expense categories. Research and development spending declined as a percentage of revenue, while sales and marketing expenses improved alongside lower general and administrative costs.
Liquidity remains another important strength. Unity generated $66 million in free cash flow during the quarter and ended the period with approximately $2.14 billion in cash and equivalents.
The strong balance sheet provides flexibility to continue funding artificial intelligence initiatives, platform improvements, and future debt obligations.
Liquidity strength remains particularly important compared with Digital Turbine, which has experienced greater pressure from advertising volatility and platform uncertainty.
Unity Software Risks From Transition and Ad VolatilityUnity still faces several risks that could create near-term volatility. The company continues navigating revenue noise tied to the ironSource Ad Network shutdown and the planned Supersonic divestiture.
Approximately 80% of Grow revenue now comes from the Unity Ad Network, increasing exposure to advertiser spending shifts and mobile gaming demand trends.
Execution risk also remains elevated as Unity integrates runtime behavioral data into live production models.
Investors are also comparing Unity’s monetization strategy with peers such as AppLovin (APP - Free Report) , Roblox (RBLX - Free Report) and Digital Turbine (APPS - Free Report) as competition intensifies across gaming and mobile advertising markets.
U Valuation Reflects Fair Pricing Relative to Growth OutlookUnity currently trades near 22.18x forward earnings, below its historical median valuation of 412.02x. The valuation appears reasonable relative to sector benchmarks and aligns with Unity’s balanced outlook.
Comparisons with Roblox and Digital Turbine also highlight how investor sentiment across digital advertising and gaming companies remains highly sensitive to monetization consistency and execution.
ConclusionOverall, Unity appears positioned as a hold-type stock with selective upside tied to continued Vector momentum, expanding margins, and improving cash generation. Unity currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways Unity Software is integrating AI across Create and Grow to unify development and monetization workflows.U's Vector platform and runtime data aim to improve ad targeting, measurement and long-term ROI.Unity Software faces execution risks as it rolls out AI models and exits nonstrategic ad units. Unity Software (U - Free Report) is strengthening its position at the intersection of artificial intelligence and advertising technology as it expands the connection between its creation tools and monetization engines. The company’s broader strategy reflects a platform approach that combines interactive 3D development, live services and ad optimization into one ecosystem. Rather than functioning solely as a gaming engine provider, Unity is increasingly positioning itself as an end-to-end platform supporting developers across creation, deployment and monetization.
Unity Software AI Integration Expands Across Create and GrowThe company’s Create and Grow segments are becoming more interconnected through artificial intelligence initiatives. On the Create side, Unity AI entered public beta in early May 2026 as an integrated agent tuned for Unity workflows. The tool is intended to automate repetitive coding tasks, improve asset generation efficiency and accelerate production timelines for studios building games and immersive experiences. By embedding AI directly into development workflows, Unity aims to improve productivity while strengthening developer engagement with its broader ecosystem.
AI is also becoming increasingly important across Unity’s monetization business. Runtime behavioral data is expected to play a larger role in campaign optimization and engagement measurement over time. On the Grow side, Unity expects runtime behavioral data to begin influencing live models later in the second quarter of 2026.
Management believes richer behavioral signals can improve advertiser targeting and increase the long-term efficiency of monetization tools across mobile and immersive environments.
U Ad Tech Innovation Driven by Vector and Data SignalsUnity’s advertising technology push is increasingly centered around Vector, the company’s machine-learning platform focused on targeting, prediction and measurement improvements. Vector has supported stronger campaign optimization capabilities while helping advertisers evaluate user quality over longer periods. The transition from Day-7 to Day-28 return-on-ad-spend optimization reflects a broader industry shift toward measuring lifetime user value instead of near-term activity. Unity believes the addition of runtime behavioral signals into production systems can further stabilize growth and improve advertising consistency as adoption expands.
Unity Software Industry Trends Support Long-Term DemandSeveral industry trends continue supporting long-term demand for Unity’s platform. Growth across gaming, extended reality and immersive digital experiences is increasing the need for scalable real-time 3D infrastructure. Unity is also benefiting from partnership expansion within the virtual reality ecosystem through deeper collaboration with Meta Platforms. The partnership supports developers building VR applications while broadening Unity’s exposure to next-generation immersive content opportunities.
Competition across interactive software and advertising technology remains intense. AppLovin (APP - Free Report) continues expanding its AI-driven advertising business, creating pressure on Unity’s Grow segment as advertisers increasingly prioritize measurable returns. Roblox Corporation (RBLX - Free Report) benefits from strong creator engagement and monetization trends, reinforcing investor interest in interactive digital platforms. Although Roblox Corporation operates a more consumer-facing ecosystem, Unity’s broader platform strategy provides exposure across developers, enterprises and gaming studios. Take-Two Interactive Software (TTWO - Free Report) reflects broader demand for premium gaming experiences requiring advanced development pipelines and monetization support. Importantly, Take-Two Interactive Software highlights how content growth across console, PC and mobile platforms can indirectly support Unity’s long-term ecosystem expansion.
U Execution Will Determine AI Monetization SuccessUnity’s near-term transition includes a multi-step rollout of runtime data into production models, rather than a single launch event. That pacing can reduce the odds of abrupt upside and increases the cost of missteps in data integration, model tuning and measurement as advertisers scale spend.
Unity is also managing noise from exiting nonstrategic lines, including the ironSource Ad Network sunset effective April 30, 2026, alongside a planned Supersonic divestiture. That runoff can create quarter-to-quarter variability even when the strategic engines are improving.
The longer-term upside rests on sustained developer engagement with Unity AI, web workflows and commerce capabilities, while Grow continues to advance measurement and targeting through Vector and richer signals. Strong liquidity supports that investment stance, including management’s intent to address a $558 million convertible maturity due in November 2026 while keeping product work intact.
Unity currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Unity Software Inc. (U - Free Report) have gained 0.9% over the past four weeks to close the last trading session at $26.77, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $36.84 indicates a potential upside of 37.6%.
The mean estimate comprises 20 short-term price targets with a standard deviation of $6.27. While the lowest estimate of $28.00 indicates a 4.6% increase from the current price level, the most optimistic analyst expects the stock to surge 101.7% to reach $54.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
However, an impressive consensus price target is not the only factor that indicates a potential upside in U. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why U Could Witness a Solid UpsideThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current year, three estimates have moved higher over the last 30 days while two have gone lower. As a result, the Zacks Consensus Estimate has increased 144.4%.
Moreover, U currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much U could gain, the direction of price movement it implies does appear to be a good guide.
AI-focused Unity Software Inc (NYSE:U) is trading 1.9% higher at $27.26 this afternoon, headed for its third-straight daily win. U is down 39% since the start of the year, and another pullback could be on the horizon as a U nears a historically bearish trendline on the charts.
According to Schaeffer's Senior Quantitative Analyst Rocky White, shares are within 0.75 of the 100-day moving average's 100-day average true range (ATR), after remaining below it 80% of the time in the past two weeks and in 80% of the last 42 trading sessions.
This signal has occurred four times in the last 10 years, after which U was lower one month later 67% of the time, averaging a 10.1% loss. From its current perch, a pullback of this weight would put the tech stock back below $25.
Currently, 15 of the 23 brokerages in coverage sport a "buy" or "strong buy" recommendation. This leaves ample room for more bears to move in, should this bullish attention begin to unwind.
Options look like an attractive route when weighing on the stock's next moves, per its Schaeffer's Volatility Index (SVI) of 70% that sits higher than just 16% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.
Unity Software stock's Schaeffer's Volatility Scorecard (SVS) comes in at 86 out of 100. In other words, the security has consistently realized higher volatility than its options have priced in over the past 12 months.
Investors might want to bet on Unity Software Inc. (U - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Unity Software Inc., strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate RevisionsFor the current quarter, the company is expected to earn $0.24 per share, which is a change of +192.3% from the year-ago reported number.
The Zacks Consensus Estimate for Unity Software has increased 640% over the last 30 days, as three estimates have gone higher while two have gone lower.
Current-Year Estimate RevisionsFor the full year, the earnings estimate of $1.03 per share represents a change of +19.8% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Unity Software. Over the past month, three estimates have moved higher compared to two negative revisions, helping the consensus estimate increase 144.4%.
Favorable Zacks RankThe promising estimate revisions have helped Unity Software earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom LineInvestors have been betting on Unity Software because of its solid estimate revisions, as evident from the stock's 6.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.
Zacks Premium includes access to the Zacks Style Scores as well.
What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
#1 (Strong Buy) stocks have produced an unmatched +23.7% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.
This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Unity Software Inc. (U - Free Report) Unity Software Inc. provides a platform to develop, deploy and grow games and interactive 3D experiences across mobile, PC, console and extended reality. Its software supports creators through the full content lifecycle, including prototyping, real-time rendering, live operations, user acquisition and monetization. San Francisco, CA-based Unity markets solutions globally through direct and indirect channels with field sales in North America, China, France, the United Kingdom, Israel, Japan and South Korea.
U is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Computer and Technology stock. U has a Momentum Style Score of A, and shares are up 13.3% over the past four weeks.
Three analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.07 to $1.03 per share. U also boasts an average earnings surprise of +7.4%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, U should be on investors' short list.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Unity Software Inc. (U - Free Report) .
Unity Software currently has an average brokerage recommendation (ABR) of 1.79, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 24 brokerage firms. An ABR of 1.79 approximates between Strong Buy and Buy.
Of the 24 recommendations that derive the current ABR, 14 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 58.3% and 4.2% of all recommendations.
Brokerage Recommendation Trends for U
Check price target & stock forecast for Unity Software here>>>
The ABR suggests buying Unity Software, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is U Worth Investing In?Looking at the earnings estimate revisions for Unity Software, the Zacks Consensus Estimate for the current year has increased 144.4% over the past month to $1.03.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Unity Software. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Unity Software may serve as a useful guide for investors.
Unity Software delivered excellent Q1 results, and Q2 guidance was similarly upbeat. U's strategic focus on indie and small studio developers, combined with a leaner cost structure, positions it to benefit as the industry shifts away from blockbuster triple-A titles. Vector AI-driven advertising is a key growth driver, with Vector revenues up 80% YoY and the Grow division guiding for ~50% growth in Q2.
