Unity Software (NYSE:U) experienced a sharp pullback in its share price, declining by about 20% after Google (NASDAQ:GOOG) disclosed Project Genie, according to William Blair analyst Bhavan Suri. InvestingPro pricing shows Unity trading near $29.10, a level far below its 52-week high of $52.15. Unity’s beta of 2.05 indicates the stock typically moves with greater volatility than the broader market.
The market reaction followed Google’s announcement that it will begin offering experimental prototype access to an interactive world model and creation engine to U.S. Google AI Ultra subscribers. Investors quickly flagged the potential for Project Genie to compete with Unity’s Create business, which today powers roughly 70% of all mobile games.
William Blair pushed back on the notion that Project Genie immediately threatens Unity’s core position. The firm emphasized the company’s platform sophistication, pointing to built-in AI capabilities, platform-agnostic deployment across more than 20 platforms, and Unity’s monetization approach that lets developers use the platform for free until they reach $200,000 in annualized revenue.
William Blair described the market response as "shoot first and ask questions later fears attributable to AI uncertainty," and characterized the selloff as "overdone." The firm added that increased content creation tools could ultimately boost reliance on Unity’s runtime operations over time.
Pricing also factored into William Blair’s view. Google AI Ultra subscriptions start at $250 per user per month, while Unity Pro is priced at $210 per user per month, despite Unity’s broader platform functionality and technical depth, the firm noted.
Financial metrics highlighted by InvestingPro support the argument that Unity has short-term stability amid the share-price decline. Unity’s current ratio stands at 2.78. Analyst consensus remains closer to a Buy with a recommendation score of 1.93 and price targets spanning $18 to $60.
Analyst activity since the Project Genie announcement has been varied, underlining divergent views on Unity’s valuation and revenue outlook:
- Wells Fargo raised its price target for Unity Software to $54, citing stronger-than-expected fourth-quarter revenue driven by Unity’s Ad Network.
- BTIG upgraded Unity from Neutral to Buy, pointing to potential upside tied to growth expectations.
- Piper Sandler moved Unity from Neutral to Overweight and lifted its price target to $59, attributing the change in part to expansion in the mobile app advertising market and growth in Unity’s Vector ad business, which the firm says has increased approximately 15% quarter-over-quarter.
- Freedom Capital Markets initiated coverage with a Buy rating and set a price target of $52, anticipating a 24% upside.
- By contrast, BofA Securities trimmed its price target to $18 and maintained an Underperform rating, citing valuation concerns and noting that Unity trades at a material premium to peers.
These shifts illustrate a split among sell-side analysts: some raise targets and upgrade ratings on expectations tied to advertising revenue and network strength, while others remain cautious on valuation despite the recent selloff.
For investors weighing the situation, the central tension is straightforward. One camp sees Project Genie as an incremental creator tool that may coexist with or even feed demand for Unity’s runtime and monetization services. The opposing view treats Google’s move as a potential encroachment into a core component of Unity’s Create ecosystem, with uncertain long-term implications for market share and pricing power.
At present, available data from analysts and InvestingPro do not resolve that debate. Price targets continue to span a wide range from $18 on the low end to $60 on the high end, reflecting substantial disagreement about Unity’s near-term growth trajectory and valuation multiple.
Investors should note that the immediate drop in Unity’s stock followed a prominent technology competitor unveiling a new set of tools, and market participants have reacted quickly. Whether the selloff is temporary or marks a recalibration of expectations will depend on subsequent product developments, competitive responses and Unity’s ability to sustain growth in advertising and runtime monetization.