Is UiPath Stock a Buy?

Investors who choose to buy UiPath (WAY 0.31%) today’s stock needs to be comfortable with a high degree of uncertainty, given that there are important, unanswered questions surrounding the business right now.

The uncertainty for UiPath starts at the top. Founder Daniel Dines briefly stepped down as CEO to be replaced by Rob Enslin. But after just four months of running the company alone, Enslin abruptly resigned, leaving Dines to take over again. The first CEO transition seemed meticulously planned, but this latest leadership change was abrupt, a red flag for investors.

However, there is another key question that UiPath needs to address beyond its long-term CEO plans. Investors are also wondering whether generative artificial intelligence (AI) is a tailwind or a headwind for the business. The company’s management says it’s a tailwind, as one might expect. But management admits its customers are confused, and that’s a troubling admission.

UiPath software automates menial digital tasks, freeing people up for more meaningful work. This sounds a lot like one of the benefits of generative AI, which explains the customer confusion. They don’t know if they should pay for UiPath services or experiment with generative AI tools.

The company will report financial results for the second fiscal quarter 2025 (ended July 31) on September 5. However, management lowered full-year expectations when it reported its first-quarter results in May. It previously expected annual recurring revenue (ARR) of $1.725 to $1.730 billion for fiscal 2025. As of its Q1 report, UiPath expects just $1.660 billion to $1.665 billion in ARR, likely as a result of customers who weigh the value of the company. services versus competing AI products.

With so much uncertainty, is there still a case to buy UiPath stock today?

What does UiPath have going for it?

Robotic process automation software is something industry insiders believe will grow substantially in the coming years. Spending in this space could expand at a compound annual growth rate (CAGR) of nearly 37% from 2022 to 2032, according to Statista. Even a fraction of that forecast would turn heads. Fortunately for UiPath, it is considered a leader in this high-growth space.

last month, Gartner named UiPath a leader in robotic process automation software for the sixth consecutive year, placing it ahead of all 12 peers considered for the report. Also, Everest Group placed UiPath in the leadership category for its report.

At the same time, UiPath is in a strong financial position to capitalize on its opportunity with $1.9 billion in cash and marketable securities as of the end of May. In addition, it is debt-free, so it has the resources to invest in this space, and its financial condition improves over time as it generates positive free cash flow.

Data by YCharts.

Despite the recent uncertainty, UiPath may be better positioned than its industry peers, and that may be reason enough for some investors to take a chance on the stock.

What could go wrong for investors?

This article began by bringing up unanswered questions for UiPath regarding its leadership and competitive positioning in AI. Enslin was originally brought in to lead the company because Dines recognized Enslin’s expertise in scaling software businesses. With Enslin gone, does Dines have the skills to take UiPath to the next level?

In addition, UiPath significantly lowered its financial guidance for the year. Are customers suddenly pulling away as generative AI offerings take off? Or is UiPath’s software simply not as useful as some of its customers had hoped?

Unless an investor has special insight into the needs of today’s businesses and how UiPath software uniquely meets them, it can be difficult to invest with a high degree of confidence here.

However, there is one last thing working in the stock’s favor: its valuation. UiPath trades at just 22 times free cash flow as of this writing, which is a fairly pedestrian valuation for a growing software company.

While UiPath may not be an uncommon purchase, it is still one of the better options when it comes to making a with caution bullish investments in a high-growth industry.