The AI boom has long been viewed as an existential threat to robotic process automation (RPA) specialist UiPath (PATH +4.09%). AI agents, the argument goes, will render the company's automation platform irrelevant.
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Shares of UiPath have been slumping since before the first version of ChatGPT was released in late 2022, and the stock has gone essentially nowhere over the past few years. Revenue growth has slowed to 14% in the latest quarter, down from 47% in fiscal 2022. Enterprises have been investing heavily in AI, likely shifting spending from other technologies.
While AI is certainly a threat, there's one reason to believe that UiPath's future looks bright, and why the stock could stage an epic recovery.
AI has limitations that make UiPath essential
A fundamental limitation of large language models is that they're not deterministic. Give an AI model the same task a bunch of times, and you'll get different results. That may not matter much in a lot of cases, but when you're automating critical business processes that involve performing actions on a computer, reliability is important.
In contrast, RPA is based on rules, making it far more reliable. The downside of RPA is that it can be brittle. A small change in the UI of some application or website could break an entire workflow and require human intervention to fix. AI, on the other hand, is far more adaptable.
"Customers consistently tell us that automation and agentic AI are stronger together," said UiPath CEO Daniel Dines in the second-quarter earnings release. Combining RPA with AI creates a solution that is both more capable and more robust than either technology on its own.
NYSE: PATH
Key Data Points
UiPath has struck multiple AI partnerships recently, including a collaboration with OpenAI to build a ChatGPT connector. By deeply integrating AI with its RPA platform, UiPath can offer capabilities that AI alone can't match. UiPath can still thrive in the age of AI, and the stock could soar as enterprises recognize that the combination of AI and RPA offers the best of both worlds.
