Last Update 05 Feb 26

PATH: AI Software Setup And Index Adds Will Support Automation Outlook

Narrative Update on UiPath

UiPath’s implied analyst price target has ticked higher as recent research cites a move from $16 to $18 at one firm and from $12 to $14 at another, with analysts pointing to a generally supportive backdrop for software and ongoing interest in AI related opportunities as key drivers for the updated views.

Analyst Commentary

Recent research on UiPath centers on how the shares might reflect a mixed backdrop for software, AI related themes, and current valuation levels. Bullish analysts and more cautious voices are looking at many of the same data points but draw different conclusions about how much risk and reward the stock offers from here.

Bullish Takeaways

Bullish analysts see a generally supportive setup for software by 2026, with macro conditions and IT spending described as stable. They view this as helpful for UiPath’s ability to execute on its automation and AI roadmap.
Some research points out that software stock valuations are currently low and the sector is out of favor. These analysts interpret that as giving UiPath more room for upside if sentiment toward the group improves.
Interest in AI related opportunities is a core part of the bullish case, as investors screen for companies that can benefit from AI trends. UiPath is often included in that conversation given its automation focus.
The recent price target resets to US$18 and US$14 are framed by bullish analysts as aligning the stock with their broad 2026 software outlook, rather than signaling a near term call on quarterly results.

Bearish Takeaways

Volatility in software tied to AI trades remains elevated. More cautious analysts highlight crowding in perceived AI winners, which can add risk if sentiment turns or expectations reset.
Some research notes keep more neutral ratings in place, indicating that while UiPath has exposure to AI and automation, there are still questions about how consistently those themes translate into growth and execution.
With investors focused on ideas that can accelerate growth from AI, UiPath may face higher scrutiny on each earnings update. This could lead to sharp share price swings around results.
Cautious analysts also point out that, even with sector valuations described as low, there is limited conviction that every software name will benefit equally. They treat UiPath’s current valuation as requiring ongoing proof of delivery on its automation opportunity.

What's in the News

UiPath is being added to the S&P 1000 index, expanding its presence across major U.S. equity benchmarks (Index Constituent Adds).
The company is also being added to the S&P Composite 1500, the S&P 400, and the S&P 400 Information Technology sector index, which can influence how index and benchmark tracking funds gain exposure to the stock (Index Constituent Adds).
Management highlighted interest in tuck in M&A, referencing the acquisition of Peak and pointing to the use of free cash flow for both opportunistic buybacks and potential further deals (Seeking Acquisitions/Investments).
UiPath announced an integration with Talkdesk to apply automation and AI to contact center workflows, including complex healthcare use cases such as prior patient authorization (Client Announcements).
The company issued fourth quarter fiscal 2026 revenue guidance in a range of US$462 million to US$467 million, giving investors a reference point for near term expectations (Corporate Guidance: New/Confirmed).

Valuation Changes

Fair Value: Model fair value estimate is unchanged at US$16.40.
Discount Rate: The discount rate has risen slightly from 8.46% to about 8.46%, indicating only a minimal adjustment to the risk input.
Revenue Growth: The assumed revenue growth rate has eased slightly from about 8.90% to about 8.90%, reflecting a very small tweak to the model.
Net Profit Margin: The assumed net profit margin has edged up slightly from about 3.09% to about 3.09%, a very modest change.
Future P/E: The future P/E assumption is effectively flat, moving only fractionally from about 164.34x to about 164.35x.

Strategic partnerships and innovation in automation aim to boost growth through deeper customer relationships and expanded market opportunities.
Go-to-market restructuring and focus on AI-driven cloud products seek to enhance efficiency, customer engagement, and revenue growth.
Geopolitical and macroeconomic challenges are impacting UiPath's revenue growth, with FX headwinds and SaaS transition affecting financial targets and margins.

Catalysts

About UiPath

Provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions primarily in the United States, Romania, the United Kingdom, the Netherlands, and internationally.What are the underlying business or industry changes driving this perspective?

UiPath's focus on accelerating innovation across the agentic automation road map is expected to grow deeper customer relationships and strategic partnerships, likely driving future revenue growth.
Increased adoption of UiPath's platform among existing customers, supported by strategic changes in the go-to-market structure, is aimed at enhancing customer engagement and boosting ARR growth.
The completion of go-to-market restructuring is anticipated to improve alignment and operational efficiency, which could lead to better net margins over time.
New product launches such as Agent Builder and Agentic Orchestration, along with strategic partnerships like with Microsoft and Deloitte, are positioned to expand market opportunities, potentially increasing earnings through higher-value deals.
UiPath's commitment to cloud offerings, with over $975 million in cloud ARR, positions the company to capitalize on AI-driven products and services, which could contribute to revenue growth and improved gross margins.

UiPath Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming UiPath's revenue will grow by 8.6% annually over the next 3 years.
Analysts are not forecasting that UiPath will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate UiPath's profit margin will increase from -4.7% to the average US Software industry of 13.1% in 3 years.
If UiPath's profit margin were to converge on the industry average, you could expect earnings to reach $243.6 million (and earnings per share of $0.5) by about September 2028, up from $-67.5 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 36.4x on those 2028 earnings, up from -86.2x today. This future PE is lower than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to decline by 2.71% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.44%, as per the Simply Wall St company report.

UiPath Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The ongoing geopolitical climate and government transitions have caused delays in deal closures, impacting UiPath's ARR expectations and potentially affecting short-term revenue growth.
Increased macroeconomic volatility has introduced uncertainty around customer budgets, leading to a more cautious financial guidance for fiscal 2026, which could impact future earnings and revenue predictability.
Currency fluctuations (FX headwinds) have negatively affected revenue and ARR figures, creating additional challenges in meeting financial targets and impacting net margins.
The move towards a SaaS model has been identified as a 2% revenue growth headwind for the full year, implying potential pressures on net margins during the transition period.
While there is strong innovation in agentic products, these advancements may not significantly contribute to fiscal 2026 revenue, suggesting potential risks to short-term revenue projections despite long-term growth potential.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $14.147 for UiPath based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $11.71.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $243.6 million, and it would be trading on a PE ratio of 36.4x, assuming you use a discount rate of 8.4%.
Given the current share price of $10.88, the analyst price target of $14.15 is 23.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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