Jefferies Upgrades Unity (U) Stock from Hold to Buy, Lifts PT

On May 30, Jefferies upgraded the rating on Unity Software Inc. (NYSE:U) from Hold to Buy, raising the price target from $22 to $29.

Brent Thill from Jefferies made the rating and price upgrade on U stock after the company exceeded its Q1 2025 results. Unity achieved $435 million in revenues during the quarter, exceeding estimates by almost $19 million. The company also surpassed adjusted EBITDA by 29%. The company’s results were driven by the migration of the Unity ad network to the new AI platform, Unity Vector. The transition to Unity Vector was completed ahead of schedule, resulting in a 15% to 20% increase in installs and in-app purchases.

Jefferies Upgrades Unity (U) Stock from Hold to Buy, Also Raises PT

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Thill is optimistic about Unity as he believes that the improved Vector ad model can drive accelerating revenue growth in FY2026 and beyond. The upcoming feature upgrades on Vector and new management will lead to at least high-single-digit percentage revenue growth in FY2026, Thill cited. The analyst sees the risk-reward as favorable, as he sees potential for “significant EBITDA upside.” The company’s guidance for Q2 indicates total revenue between $415-$425 million and adjusted EBITDA in the range of $70-$75 million.

Unity Software Inc. (NYSE:U) offers a platform for creating and growing games and interactive experiences. The company provides various tools across all platforms, from mobile, PC, and console, to extended reality (XR). The company’s AI solutions support creators through the entire development time period.

While we acknowledge the potential of U to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than U and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.