Is UiPath Stock Cheap Because Of What AI Might Do?

UiPath (PATH) has fallen about 27% from its one-month high, though it is still up 34% over three months. The stock trades at 19.5 times earnings, against an S&P 500 median of 22.6. For a software company growing faster than most of the market, that looks like a gift. The question is whether investors see an AI threat the numbers do not show yet.

Why Does UiPath Look Like A Bargain?

UiPath sells software that automates office work. Software robots repeat fixed steps, AI agents handle tasks that require judgment, and Maestro orchestrates both across the whole process. Buyers include banks, a global insurer and the Department of War, which uses UiPath for military audit work.

Revenue has grown 14.5% a year on average over three years, against an S&P 500 median of 5.8%. Of $1.72 billion in revenue over the last twelve months, $0.36 billion became free cash flow, a 5.1% yield on the stock. UiPath also holds $1.4 billion in cash and securities and no debt, about a fifth of its $7.1 billion market value.

Why Is The Market Still Wary Of UiPath?

Look further back, and the profits are young. Operating margin averaged -2.7% over the last three years, and fiscal Q2 2027 was only UiPath’s fourth straight quarter of GAAP profit. So the 19.5 multiple, priced on net income, rests on a profit base still cushioned by non-operating income — trailing operating margin is just 8.9%, well below the 21% net margin the multiple implies.

The bigger worry is AI itself. On the fiscal Q2 2027 call, an analyst asked what a new AI model from one of the large labs, reportedly far better at running workflows, means for UiPath’s own workflow business. The CEO also concedes the company is still testing how to price its AI agents.

None of the AI worry shows in the reported numbers yet. Operating margin did not shrink over the last twelve months versus the year before, and management raised its fiscal 2027 outlook for revenue and annual recurring revenue (ARR). If the discount is about AI, it prices a forecast, not a business that is already slipping.

Can UiPath Make AI Work For It Instead?

Management argues that UiPath’s automation and AI need each other. In the CEO’s view, AI models cannot learn a company’s way of working on the job. Deterministic automation is cheaper and more reliable for steps that need the same result every time, and it runs without AI tokens.

Customers are buying the combination. In fiscal Q2 2027, 18 of UiPath’s top 20 deals included AI. Financial firms are moving entire automation programs onto the platform, some using Test Cloud, its software-testing product.

The test is management’s own bar. ARR stood at $1.938 billion at the end of fiscal Q2 2027, and the fiscal 2027 guide is $2.065 billion to $2.070 billion. Reaching the low end means adding about $127 million in the two remaining quarters. UiPath added $37 million in fiscal Q2 2027, up from $31 million a year earlier, so the guide needs a much faster pace.

Clearing that bar would support management’s case that AI widens UiPath’s market. Missing it would support the AI worry. Our Buy the Dip screen ranks marked-down stocks whose fundamentals still hold up.

So Should You Buy UiPath At This Discount?

Perhaps, if you believe companies will keep paying for exact, low-cost automation alongside AI. Still, this is a bet on the AI question, which is different from betting that the market overlooked a steady grower. Judging one stock through a technology shift is hard. The Trefis High Quality Portfolio spreads that judgment across businesses screened for growth, margins, and balance-sheet strength. That portfolio has a track record of outpacing the three major indices.