Unity Software Inc. (U) Reports Q2 2025 Results; Morgan Stanley Raises PT to $40

Unity Software Inc. (NYSE:U) is included in our list of the 11 Hot Software Stocks to Buy Now.

Unity Software Inc. (U) Reports Q2 2025 Results; Morgan Stanley Raises PT to $40

A person using a laptop with a blue background showing the software platform’s user inteface.

On August 6, 2025, Unity Software Inc. (NYSE:U) reported results for Q2 2025. While the company slightly missed earnings expectations, it reported revenue that exceeded guidance by $16 million. Meanwhile, adjusted EBITDA reached $90 million, exceeding expectations by $15 million.

Unity Software Inc. (NYSE:U)’s partnerships with Tencent, Scopely, Nintendo, and major automakers helped the company expand its footprint beyond the gaming sector. The Vector segment resulted in a 15% sequential growth for Unity Ads, offsetting softness in other ad products. Meanwhile, the Create segment experienced a double-digit subscription growth, thanks to the rapid adoption of Unity 6.2. The company reported EPS of negative $0.26, compared to negative $0.25 expected.

Following the earnings release, on August 7, Morgan Stanley raised its price target from $25 to $40, maintaining an ‘Overweight’ rating. The investment firm also increased FY26 and FY27 EBITDA forecasts by 8% and 19%, respectively.

Unity Software Inc. (NYSE:U) serves gaming, entertainment, and various other industries worldwide with its real-time 3D content creation platform. It is included in our list of the hot stocks to buy.

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.

READ NEXT: 13 Best Oil Refinery Stocks to Buy Right Now and 7 Best Potash Stocks to Buy According to Analysts.

Disclosure: None.