UiPath's AI-Driven Surge Confronts Valuation and Growth Realities

What happened

UiPath shares have surged 51% in three months, driven by accelerating agentic AI adoption that is boosting deal sizes, margins, and market confidence. This optimism stems from the company's pivot toward AI agents, as highlighted in recent promotional content. However, the DeepValue master report reveals that UiPath's revenue growth has slowed to about 9% from 24%, indicating a maturing business amid intense competition. The stock now trades at a rich valuation of approximately 43x P/E and a 233% premium over a conservative DCF intrinsic value estimate, suggesting limited margin of safety. Despite strong fundamentals like high gross margins and positive free cash flow, the rapid price appreciation appears disconnected from underlying growth deceleration and competitive threats.

Implication

The price surge reflects market hype around AI, but it overlooks UiPath's decelerating revenue growth and fierce competition from hyperscalers and AI-native tools. With the stock trading far above intrinsic value, downside risk is elevated if growth fails to re-accelerate or margins erode. Positive aspects like robust cash flow and a strong balance sheet offer some protection but do not justify the current premium. Monitoring ARR growth and AI-agent adoption is crucial to assess whether the optimism is warranted. Until clearer evidence emerges, investors should avoid new positions and wait for a better entry point or confirmation of sustained improvement.

Thesis delta

The DeepValue report's 'WAIT' thesis, based on high valuation and slowing growth, remains unchanged despite the recent AI-driven surge. The new article highlights optimism but does not provide evidence of fundamental acceleration or margin expansion. A shift to a more bullish stance would require sustained ARR growth re-acceleration and proof that AI agents are driving meaningful market share gains.