Shares of robotic process automation specialist UiPath (PATH +0.78%) slumped 23.2% in January, according to data provided by S&P Global Market Intelligence. While there was no major news during the month, growing fear about the impact of artificial intelligence on the enterprise software industry was the likely culprit behind the crash.
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A risk and an opportunity
UiPath's RPA platform enables enterprises to automate workflows on a PC. Many legacy PC applications that businesses still rely on are difficult or impossible to integrate directly with other applications. UiPath's platform allows users to create rules-based workflows that overcome these limitations by interacting with applications, browsers, and data.
The AI industry has advanced rapidly, and it's now coming for exactly the kind of use cases that UiPath targets. Anthropic's Cowork, a research preview of an AI agent that can access files, use web browsers, and interact with applications via a growing ecosystem of plugins, poses a real threat to UiPath's business model.
While investors are right to be concerned, UiPath has been embracing AI and integrating the technology into its RPA platform. The downside of a pure RPA platform is that workflows are rigid and inflexible. If a website's interface changes, an entire workflow could break. An AI agent can adapt, making AI potentially more robust.
Where AI fails, though, is consistency. AI isn't deterministic, meaning that the same inputs can yield different outputs. While an RPA workflow will do the same thing every time, an AI workflow will inevitably be flakier. For mission-critical enterprise workflows, that's not good enough.
By combining both technologies, UiPath's platform can offer the best of both worlds. A typical workflow may start with a deterministic robot, hand off tasks to an AI agent when necessary, and then return to the robot. When humans need to make decisions, the workflow can loop them in as well. This is far more powerful than either RPA or AI on their own.
Should you buy the dip in UiPath stock?
UiPath's revenue rose by 16% year over year in the third quarter of fiscal 2026, and the dollar-based net retention rate was a solid 107%. This suggests that enterprises are buying into the platform and its AI-augmented capabilities.
NYSE: PATH
Key Data Points
While UiPath could end up as an AI winner, the company will face competition from AI-first platforms. AI is improving quickly, and it's possible that AI agents will become reliable enough to largely displace UiPath's platform.
UiPath has the right idea, combining AI with its RPA platform, and it could pay off in the long run for investors buying the dip. However, there's significant uncertainty, and the stock could remain under pressure for quite some time even if AI turns out to be more of an opportunity than a risk for the company.
