UiPath (PATH): A Dicey Dip into the AI-Automation Boom

The Big Idea: After a brutal multi-week selloff, UiPath – the leader in robotic process automation (RPA) – is offering what looks like a bargain-basement entry for bargain hunters. The stock has plunged roughly 30% from its late-2025 highs despite stellar execution and accelerating AI tailwinds. In Q3 FY2026 ended Oct 31, 2025, UiPath reported $411M in revenue (up 16% YoY) and ARR of $1.782B (up 11% YoY) – handily beating expectations and sending their metrics through the stratosphere. Crucially, management delivered first-ever GAAP profitability and raised all the guidance targets for Q4 FY2026. In other words, the fundamentals are screaming “buy the dip,” even as the stock languishes near its 52-week lows. With CEO Daniel Dines confidently touting that “automation and agentic AI are stronger together… positioning UiPath to lead the next era of enterprise transformation,” we see an oversold bounce playing out to the 20-day moving average (~$14.2) much sooner than most traders expect. We’re targeting $14.30 – about a 11.7% rally – on this tight, risk-defined mean-reversion setup.

What’s Changed / Why Now

UiPath’s recent weakness is largely a market-driven overreaction, not a reflection of deteriorating business. The broader tech/software sector has wobbled amid macro jitters, dragging even top-tier names down. But the proof is in the pudding: UiPath’s Q3 results far exceeded both guidance and consensus. Management chalked the beat up to “improved execution and the growing momentum of our agentic capabilities.” Every sub-metric points up: dollar-based retention was ~107%, net new ARR hit $59M, and cloud adoption is accelerating. Even more encouraging, CFO Ashim Gupta noted that “we’ve made good progress on returning to our entrepreneurial roots and refocusing our teams to be more customer-centric,” with the fruits of this work manifesting as accelerating cash flow growth.

At the same time, the AI + automation story is only getting juicier. UiPath is fiercely integrating large language models and advanced orchestration tools – the CEO specifically highlighted their Screenplay product and use of GPT-5 across the platform – to push an “agentic automation” vision that companies are eagerly buying into. Recent partnerships (like joining Veeva’s AI partner program in late 2025 to bring automated testing to life sciences software) underscore that UiPath isn’t just riding the AI wave, it’s steering it. In short, fundamentals and strategic positioning have strengthened, even as sentiment has soured. This makes now – when PATH trades near key support – a prime entry window.

Catalysts Ahead

  • Q4 Guidance & Execution: Management raised Q4 FY26 guidance to $462–467M in revenue (from prior $422–427M), implying continued growth acceleration. Any positive color on Q4 bookings or margin expansion (due at mid-Feb earnings) could spur a relief rally.
  • AI/Partner Momentum: Deployments of UiPath’s latest AI-driven features and integrations (GPT-5, Google Gemini, etc.) into live customers will hit critical mass. Every new high-profile partnership (like the Veeva validation deal in Dec 2025) validates the thesis.
  • Sector Rotation: If inflation/interest-rate pressures moderate, tech stocks stand to rebound. Even a modest reboot in “software/AI” sentiment would bounce UiPath hard from oversold territory.
  • High Short Interest: With a very high recent short-volume ratio (~40% on Feb 3, 2026), any trace of optimism could ignite a short squeeze.
  • Robust Customer Wins: Enterprises are moving from pilots into production robots. Announcements of major new clients or expansions could trigger renewed buying.
  • Valuation Catch-up: Despite a drop to ~$12.8, PATH’s long-term growth and market leadership argue for multiple expansion toward peers.

The Numbers That Matter

  • ARR Growth: +11% – ARR hit $1.782B in Q3 FY26, indicating sticky, growing revenue streams.
  • Revenue Growth: +16% – Q3’s $411M top-line was well above analyst estimates and the year-ago $355M, demonstrating robust demand.
  • Dollar Retention: 107% – UiPath is keeping and expanding its customer base.
  • Net New ARR: $59M – Q3 net new bookings are rebounding (up from $31M in Q2), implying sales execution is improving.
  • Profitability: GAAP+ – Q3 produced $13M GAAP operating income and $88M non-GAAP operating profit; the company is on a path to self-sustaining profits.
  • Cash Buffer: $1.52B – Large cash reserves and essentially net-zero debt mean UiPath can invest or weather storms.
  • Customer traction: Customer base is over 9,000 enterprises globally, and the number running AI agents has doubled quarter-over-quarter.
  • Valuation: Trading at roughly 30x FY2026 EPS and <4x sales after the selloff.

Technical/Price Action Context

Technically, PATH is set up for a bounce. It’s oversold – 30-day RSI is ~39 – and has plunged below its 20-day moving average (~$14.2) to invite a mean reversion. The recent trading range has been $12–$16; we’re buying near the lower end of that band.

We plan to enter around $12.60–$13.10, effectively at current levels, banking on formation of a short-term base. The stop-loss is pegged at $11.65, just under the critical $12 handle and below the most recent swing low. If our thesis plays out, reclaiming the 20-day moving average (~$14.1) should be straightforward. Our target is $14.30, essentially the late-January high and just above the 20-day MA. That’s roughly an 11–12% gain from today’s price.

Price charts also show short-term support near $12.80, and longer-term support around $11.6–$12.0 (the stop). On the upside, the prior gap zone around $14.0–$14.5 is the first resistance hurdle. The stock is down ~35% from its 52-week high ($19.84).

Risks & What Could Go Wrong

  • Broader Tech Pullback: If the entire software/AI sector rolls over again, the oversold bounce could fizzle out.
  • Volatility and Stops: High volatility could trigger stops if the stock spikes below $12 before stabilizing.
  • Failure to Reclaim 20-Day MA: If UiPath can’t clear ~$14.2 quickly, the bounce may be shallow and brief.
  • Execution Missteps: Any signs of customer churn, missed guidance, or slowdown in agent development would undercut the rally thesis.
  • No Quick Catalyst: Aside from earnings, there are no urgent news events on the immediate calendar; the stock could drift sideways.

Bottom Line

UiPath’s recent pullback has painted a picture of “everything must be bad,” but the reality is quite the opposite. This is a best-in-class software franchise hitting inflection points as AI-driven automation gains traction. We have a high-conviction setup: enter now at a bargain price, keep tight stops, and ride the natural bounce back toward the mid-teens. At $13 or below, we’re essentially buying professional-grade automation software with an AI turbocharger at less than 4x sales. If it works, this trade could quickly flip for double-digit gains.

Not financial advice: This is a speculative, short-term mean-reversion play. Investors should use proper position sizing and risk management.