Prediction: Unity Software Will Soar Over the Next 5 Years. Here's 1 Reason Why.

Key Points

• Unity stock has been highly volatile since its public debut.

• The stock has seen big gains over the last year but still trades down roughly 78% from its high.

• Unity's new AI-powered digital marketing platform could pave the way for big gains.

• 10 stocks we like better than Unity Software ›

Unity Software (NYSE: U) has experienced a volatile trading period since its initial public offering (IPO) in September 2020. While the company's share price has rocketed 89% higher over the last year of trading, it's still down 37% from market close on the day of its IPO.

Even more shocking, the stock is down 78.5% from its valuation peak as of Sept. 26. But even though Unity stock has seen highly uneven trading across its history as a publicly traded company, it could still be in the early stages of a massive long-term rebound and success story aided by artificial intelligence (AI) technologies.

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Image source: Getty Images.

Unity has the pieces in place to deliver big wins

Unity's business has experienced some rough patches, largely due to poorly placed growth bets and poorly received monetization strategies. On the other hand, the company retains a leading position in the game-development-engine services niche. The company's strengths in its corner of the video game industry should also help it tap into, and better leverage, digital marketing opportunities.

Earlier this year, Unity rolled out its new AI-powered digital marketing platform -- and results with the new software have already been encouraging. With the Q2 report it published in August, the company announced the sales for the Unity Ad Network had increased 15% on a sequential quarterly basis thanks to the impact of its now AI-focused ads platform. The new ad tech and focus on operational efficiency looks poised to power performance improvements for Unity's business that wind up being very rewarding for patient shareholders.

Should you invest $1,000 in Unity Software right now?

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Keith Noonan has positions in Unity Software. The Motley Fool has positions in and recommends Unity Software. The Motley Fool has a disclosure policy.