It’s not all fun and games for the video-game industry. There’s some serious profit to be had by some of the industry’s fastest-rising stars. And in this piece, we’ll check in on two of the most blistering names in the space that have outpaced the broad market and could continue doing so for another several quarters.
With the confidence of some big-name Wall Street veterans and a game plan (forgive the pun) to gain share and keep growth going strong, the following pair of gaming stocks is more than capable of leveling up further. But with somewhat extended valuations, investors should proceed with caution as momentum does, in fact, work both ways. In any case, it’s game on for the following stocks as they look to carry their strength into the year’s end.
Unity Software
Unity Software (NYSE:U | U Price Prediction) stock looks interesting now that it’s pulled back close to 10% from its multi-year high just north of $36 per share. Despite the recent correction, the firm behind its popular video-game engine appears to be back on track after spending several years in the penalty box.
Recent restructuring efforts and strategic investments appear to be showing signs of paying off, with customers enjoying “rapidly improving returns,” at least according to well-respected Morgan Stanley analyst Matthew Cost. Indeed, early strength in Unity’s AI-driven Vector ad model has been quite encouraging, with a quantifiable improvement (around 15-20% according to Mr. Cost and his team) in ad results.
It’s not just ads where Unity can get a boost. As the firm explores how AI can fit in across its broad platform, there’s a lot for developers to get excited about as game development collides with the AI boom. As the early Vector hype fades away and U shares come in, I think there’s a real opportunity to grab a few shares marked down. Time will tell if Unity stock’s summer gains will be wiped out entirely.
Either way, expect the name to be a major mover going into its early-August earnings. With high hopes for a continued AI-driven rebound and many analysts staying mild on the stock after its latest melt-up, I’d not look to chase ahead of the number. Instead, watching for dips could be the way to go, given the amount of froth that’s still on the stock.
In short, Unity is a great long-term bet that’s finally enjoying a turning of the tide. With a heated stock and an uncertain valuation, though, I think it’s best to adopt a cautiously optimistic stance with the name.
Roblox
Roblox (NASDAQ:RBLX) is another high-momentum gaming play that’s captured the hearts of Wall Street this year. Shares are up 101% year to date, thanks in part to a reinvigoration of growth, AI tailwinds, and a blockbuster hit game (Grow a Garden) that took the world by storm.
Like Unity, Roblox is more of a video-gaming platform with staying power. And while Roblox has made good use of AI, it appears to be just scratching the surface. The company’s new Cube 3D generative model looks pretty incredible, allowing users to create 3D assets, scenes, and all the sort through nothing more than a text prompt.
Indeed, such AI tools could effectively make every one of its users a creator capable of building profound new experiences in the Roblox universe. This boosts Roblox’s odds of getting another Grow-a-Garden-like hit in the future. As Roblox makes a deeper dive into AI with smart NPCs (non-player characters) while spinning its flywheel faster, I’m inclined to buy RBLX stock here, even at close to new highs. I’m a huge fan of the stock and believe it’s one of the market’s next big beneficiaries of AI.
As much as I’m impressed with Unity’s turnaround, I do think Roblox has more potential to level up going into the second half and into 2026. Is the stock expensive going into late-July earnings? It’s definiely not cheap. But it deserves to be expensive, given its impressive, unique growth profile and all the catalysts up its sleeves. At the end of the day, Roblox is empowering its users. Give them AI tools, and they will build.
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