Wedbush Cuts Target Price on Unity (U) to $30, Due to AI Concerns

Unity Software Inc. (NYSE:U) is one of the 13 High-Risk High-Reward Growth Stocks to Invest In.

On February 12, Wedbush cut its target price on Unity Software by 18.9% to $30 (from $37) but maintained an Outperform rating on the stock. Soft Q1 2026 guidance (despite decent Q4 2025 results), the threat of artificial intelligence, and a shift in strategy were the main concerns for the firm, leading to the target price change.

This research update came a day after Unity released its Q4 2025 earnings on February 11. The results showed revenue growing 10% YoY to $503.1 million (vs. $457.1 million). Both the Create Solutions (8% YoY growth to $164.9 million from $152.2 million) and Grow Solutions (11% YoY growth to $338.2 million from $304.9 million) segments contributed to this result. Adjusted EBITDA, meanwhile, outpaced revenue, growing 25% YoY to $125 million (from $106 million).

The company’s management also provided its guidance on Q1 2026. They expect Q1 revenue of $480 million to $490 million, below street estimates of $492 million. These revenue figures imply a YoY growth rate of between 10.3% and 12.6%, but a flat quarter-on-quarter growth rate.

As for the impact of artificial intelligence, Google on January 29 rolled out access for Project Genie, an “experimental research prototype [which] lets users create, explore, and remix their own interactive worlds.” Since this release, Unity’s stock price has fallen 44.2%.

Unity Software Inc. (NYSE:U) is a leading video engine developer based in San Francisco, California. The company was founded in 2004 by Joachim Ante and David Helgason.

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