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New: Instantly spot drawdowns, dips, insider moves, and breakout themes across Maps and Screener.
UiPath has carved itself a profitable niche in the agentic AI market.
It differentiates itself by focusing on automation for repetitive office tasks.
It's winning business with government agencies, signaling its competitive position.
After falling by over 80% from its previous peak, UiPath (NYSE: PATH) stock trades at a more favorable valuation that makes it a compelling buy for investors. The agentic AI specialist still trades at a price-to-sales multiple of 5, which isn't a bargain, but even Palantir Technologies didn't look cheap when it bottomed in 2022.
Smart investors know that valuation multiples are backward-looking. It's a business's future growth that determines where the stock goes next. UiPath is starting to turn a profit just as it is positioning itself as an essential platform provider for agentic artificial intelligence (AI).
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Image source: Getty Images.
Companies are expected to significantly expand their use of AI agents in the coming years. This promises a substantial increase in productivity, as agents can complete a series of complex tasks, such as reading documents, downloading apps, and writing software code, all without human intervention.
Palantir could be perceived as a threat to UiPath, as it is also pushing into agentic AI, but these two companies are tackling different problems. Palantir is pursuing high-value contracts to help organizations manage complex supply chains and other operational challenges. UiPath provides automation software for repetitive office tasks. These are different markets, which is why both companies are growing revenue.
UiPath is expanding its government business with the U.S. Coast Guard, Veterans Administration, and Social Security Administration. Management sees substantial opportunity ahead in the public sector, indicating competitive differentiation in what it offers.
The company is on track to report its first profitable year, which could benefit the stock. Wall Street expects the company's revenue to reach nearly $1.9 billion in the next two years, while its earnings should grow faster as margins expand. At the current $14.31 share price, the stock is trading at a forward (one-year) price-to-earnings ratio of 19, making it a compelling value in the agentic AI market.
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John Ballard has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies and UiPath. The Motley Fool has a disclosure policy.
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