Unity Software Inc. (U): A Bull Case Theory

We came across a bullish thesis on Unity Software Inc. on TickerTango’s Substack by Michel. In this article, we will summarize the bulls’ thesis on U. Unity Software Inc.’s share was trading at $31.83 as of August 1st.

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A computer technician working on a video game console with a gaming headset.

Unity Technologies, the pioneer of cross-platform game development, powers over 60% of mobile games globally and around 70% of the top 1,000 titles, cementing its position as the dominant engine for indie and mobile developers. Beyond gaming, Unity’s real-time 3D (RT3D) tools serve industries like architecture and aerospace, while its Grow Solutions arm monetizes content through a robust ad network.

Despite its leadership in game engines and partnerships with Apple and Google for XR, Unity has faced turbulence since its 2020 IPO, which was timed at peak tech valuations. Missteps such as the controversial runtime fee and heavy layoffs under previous leadership damaged developer trust and investor confidence, driving the stock from $201 to $14.

A major turnaround began in late 2023, with strategic restructuring and renewed focus on core strengths under interim CEO Jim Whitehurst, followed by the appointment of Matthew Bromberg as CEO in 2024. Unity exited non-core businesses, raised subscription pricing, and launched Unity Vector, its AI-powered ad platform, ahead of schedule, positioning it to compete more effectively with ad tech leader AppLovin.

Early results are encouraging, with improving developer sentiment—80% plan to upgrade to Unity 6—and operational discipline reflected in rising margins and free cash flow. While Unity remains unprofitable and faces execution and macro risks, its undervalued position relative to peers and exposure to high-growth trends in gaming, AR/VR, and AI-powered advertising offer a compelling contrarian case. If successful, Unity could transform from a challenged player into a high-quality growth asset, delivering significant upside potential for long-term investors.

Previously, we covered a bullish thesis on Unity Software Inc. (U) by @AlphaSenseInc in May 2025, which highlighted Unity’s dominance in mobile gaming and expansion into enterprise sectors. The stock has appreciated about 46% since its refocus on core strengths gained traction. The thesis still stands. Michel shares a similar view but emphasizes Unity’s turnaround strategy, operational discipline, and AI-driven ad platform launch.

Unity Software Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held U at the end of the first quarter which was 48 in the previous quarter. While we acknowledge the risk and potential of U as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than U and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.