Missed Palantir? Buy UiPath instead.

Palantyr was one of the hottest artificial intelligence (AI) stocks on the market. Its expertise and new product launches were nearly flawless, helping the stock rise. However, there was a period when the market doubted the company, and the stock suffered.

One company that has not been flawless is UiPath (PATH 1.32%). UiPath has had its share of stumbles, but it’s still a fantastic business with a great product and a huge runway. Unlike Palantir, UiPath isn’t valued for perfection. In fact, it’s barely valued — almost as much as Palantir was in early 2023.

So if you’re looking for a software stock that has a chance of succeeding, I would definitely consider UiPath.

UiPath software has a huge room for development

The UiPath product is robotic process automation (RPA) software. While not an AI product per se, UiPath has a number of AI plugins and capabilities to expand the number of processes a client can automate. The software can be deployed company-wide, automating repetitive tasks like creating expense reports or responding to customer service emails. Removing repetitive tasks from an employee’s day frees them up to do tasks that require original thinking, which increases both productivity and morale.

RPA is a practical way to implement AI in a company and is set to see widespread adoption around the world. According to Grand View Research, the RPA market is expected to grow from around $3 billion in 2023 to over $30 billion by 2030. This compound annual growth rate of almost 40% represents a huge investment opportunity.

UiPath already has a significant position in this market and one of the most powerful sponsors: Microsoft. UiPath and Microsoft have a strong partnership, and UiPath has already launched automation tools that integrate Microsoft Copilot. Since many companies run their business through Microsoft Office products, this integration and partnership is crucial.

The narrative about UiPath’s future is pretty rosy, and investors can easily see how UiPath can succeed. However, it hasn’t been a standout lately.

UiPath had one weak quarter, but it wasn’t enough to write off the stock

In the first quarter of fiscal 2025 (ending April 30), UiPath fell short of expectations. A key metric for UiPath is annual recurring revenue (ARR), or how much revenue the company makes from subscriptions. In the first quarter, ARR came in at the low end of its forecast, coming in at $1.51 billion, though it still grew 21% year over year. Unfortunately, UiPath drastically lowered its full-year forecast, dropping it from $1.73 billion to $1.67 billion.

Alongside that drop came the news that CEO Rob Enslin was stepping down. That’s usually a bad sign, but Enslin only became full CEO on February 1, after serving as co-CEO since April 2022. The role was taken over by UiPath founder Daniel Dines, who was co-CEO until Enslin took over in February.

The transition should be relatively seamless, as Dines is already in the role and has led UiPath through years of rapid growth.

While the market may see this misstep and transformation as a problem, I don’t. This misstep may have been enough to push Enslin out the door and return Dines, who has a great track record, to power. We’ll have a better idea of ​​whether UiPath can turn this around after its second-quarter results, which are due on September 5.

I am sure the management will be able to change this, and the forecasts for Q2 may have been artificially low so that the company could have a positive quarter after a weak one.

But the damage has already been done as shares are trading at very low prices.

PATH PS data by YCharts

An AP/S ratio of 4.8 is a very low price for a growth software stock. While UiPath has its challenges, I think it’s a great buy.

UiPath may have had one bad quarter, but that’s not a pattern. I think the market has been too quick to abandon this stock in favor of flashier AI software names. This is a great opportunity for long-term investors, as UiPath is still well-positioned to become a giant.

Keithen Drury has a position in UiPath. The Motley Fool has positions in and recommends Microsoft, Palantir Technologies, and UiPath. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.