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

We came across a bullish thesis on Unity Software Inc. on Dragon’s Den Investing’s Substack. In this article, we will summarize the bulls’ thesis on U. Unity Software Inc.’s share was trading at $36.58 as of October 14th. U’s forward P/E was 129.8 according to Yahoo Finance.

Unity (U) has experienced a volatile five-year journey, rising from its $52 IPO to $197 in 2021 before dropping to $15 in 2024, and recently recovering to $43. The company’s software tools power immersive worlds, primarily in gaming, reaching four billion monthly active users. Despite this scale, Unity struggled to monetize effectively, leading to declining revenues in 2024 and market concerns about its viability. A leadership change in 2025, with Matthew Bromberg as CEO, has restored confidence, driving a 118% six-month stock rebound as investors anticipate a turnaround.

Unity faces both opportunity and risk from AI and large language models, which can generate content cheaply but still require a game engine to integrate it into cohesive products—Unity’s core competency. Strategic partnerships with Tencent, Google, and Meta in AR/VR ecosystems strengthen its position in emerging XR markets, while Meta’s attempt to develop its own engine highlights Unity’s strategic importance, though historical precedent suggests competing engines rarely displace established platforms.

The company’s financials remain challenged, but its massive scale and potential to capture new revenue streams—such as in-game ads, content monetization, and XR development—provide a path toward profitability. Investors are watching Unity as a calculated risk, balancing high growth potential against market and execution uncertainties. While not recommended as a core holding, the stock offers substantial upside for those willing to endure volatility, with careful attention to dips in price and the company’s execution under its new leadership. Unity’s story is one of adaptation, scale, and strategic positioning, suggesting that with the right management and monetization, it could capitalize on AI-driven content trends and XR growth to deliver significant long-term returns.

Previously we covered a bullish thesis on Unity Software Inc. (U) by @AlphaSenseInc in May 2025, which highlighted the company’s dominance in mobile gaming, developer tools, and expanding enterprise footprint. The stock has appreciated approximately 67.72% since our coverage as the thesis played out with continued market relevance. Dragon’s Den Investing shares a similar perspective but emphasizes CEO-led turnaround, AI opportunities, and AR/VR partnerships.

Unity Software Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held U at the end of the second quarter which was 52 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.