BofA Lowers Unity Software (U) PT to $18 Citing Premium Valuation

Unity Software Inc. (NYSE:U) is one of the best large cap stocks to buy under $50. On January 26, Bank of America reduced its price target for Unity Software to $18 from $21 while maintaining an Underperform rating. This sentiment was announced as part of the firm’s Q4 2025 preview, where BofA stated that Unity Software is priced for perfection, trading at a significant premium compared to large-scale online ad stocks and AppLovin Corp. (NASDAQ:APP).

On January 15, Freedom Capital initiated coverage of Unity Software with a Buy rating and a $52 price target, arguing that a premium valuation is warranted by the early success of its Vector AI technology and noting that its current multiple is less than half that of AppLovin.

Additionally, on January 13, Morgan Stanley increased its price target for Unity Software to $52 from $48 with an Overweight rating. The firm anticipates that 2026 will mirror 2025’s trends in the internet sector, with investors favoring companies that show clear returns from GenAI or GPU-driven technologies. Conversely, Morgan Stanley suggested that subsectors facing disruption will likely experience lower valuation multiples.

Unity Software Inc. (NYSE:U) operates a platform to create and grow games and interactive experiences for mobile phones, PCs, consoles, and extended reality devices in the US, China, Hong Kong, Taiwan, Europe, the Middle East, Africa, the Asia Pacific, Canada, and Latin America.

While we acknowledge the potential of U as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.