Unity Software (U 3.90%) stock has rebounded about 88% year to date. Its recent financial results are supporting that momentum, as CEO Matt Bromberg called the company's second quarter an "inflection point" for the company's turnaround.
The reason it's not too late for investors to buy is that Unity is positioned for accelerating growth in 2026 that isn't fully reflected in the stock's valuation.
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What is driving Unity Software stock
Unity sells subscriptions to use its software for making games on mobile and other gaming platforms. However, the other half of the business, its Grow segment, is laying the groundwork for explosive revenue from Unity Vector, a new artificial intelligence (AI)-powered product that helps game makers target and retain players.
Unity has a competitive advantage, with billions of people engaging with apps supported by its game creation software. This will drive more relevant targeting for Vector AI, improving the return on ad spending for game makers and, consequently, generating revenue for Unity.
NYSE: U
Key Data Points
At the same time, the adoption of no-code tools in the game creation process could ignite more content creation, which in turn, adds more opportunities for Unity to grow its business.
Analysts expect Unity's total revenue to grow just 1% this year, before accelerating to 12% next year, reaching over $2 billion. Free cash flow is expected to grow at a 25% annual rate, reaching $889 million by 2029. This improvement in profitability should further support upside for patient investors.
