Jefferies anticipates that rather than developers abandoning traditional engines altogether, companies like Unity and Roblox are more likely to integrate new generative models into their existing tools.
- Investors reacted sharply to the AI world-creation prototype’s rollout, which briefly wiped out about $47 billion in market value for video game stocks.
- Jefferies underscored how an explosion of AI-generated gaming content could elevate the importance of standout ad placement.
- Project Genie allows users to generate immersive digital worlds instantly.
Jefferies analyst Brent Thill has expressed confidence in the gaming company Unity Software (U) despite the recent selloff in gaming stocks triggered by a new artificial intelligence tool from Alphabet Inc.’s (GOOG, GOOGL) Google.
Investors reacted sharply to the AI world-creation prototype project Genie’s rollout, which briefly wiped out about $47 billion in market value for video game stocks, but Jefferies sees opportunities beneath the volatility rather than structural threats to the gaming platforms.
Analyst’s Take On AI Impact
After Google made its experimental Project Genie available to AI Ultra subscribers in the U.S., investors appeared to reassess the outlook for stocks tied to gaming-engine and ad tech.
Jefferies anticipates that rather than developers abandoning traditional engines altogether, companies like Unity and Roblox (RBLX) are more likely to integrate new generative models into their existing tools.
This perspective suggests a collaborative trajectory with AI instead of outright displacement, helping regain confidence in these platforms.
Unity stock traded over 3% higher by Monday mid-morning. On Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory amid ‘extremely high’ message volume levels.
Distribution Premiums
The firm also underscored how an explosion of AI-generated gaming content could elevate the importance of standout ad placement. ForAppLovin (APP) and ad products within Unity’s ecosystem, Jefferies sees premium distribution as a key differentiator.
Jefferies maintains a ‘Buy’ rating on Unity. On Friday, Unity CEO Matthew Bromberg took to the social media platform X to calm concerns from developers and investors about “world models” technology.
He said these tools, like Project Genie, can help spark new ideas and creativity, but they are not advanced enough to replace game engines like Unity. Project Genie allows users to generate immersive digital worlds instantly, using simple text prompts or images, and then navigate those environments in real time.
U stock has gained over 39% in the last 12 months.
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