New York, January 31, 2026, 05:07 (EST) — Market closed
- Unity shares plunged 24.2% to close at $29.10 on Friday following news about Google’s “Project Genie” that sent shockwaves through game stocks.
- Roblox and Take-Two Interactive fell as investors mulled over AI tools that might reshape game development.
- Traders are focused on Monday’s follow-through and Unity’s upcoming earnings report set for Feb. 11.
Unity Software shares closed Friday down 24.2% at $29.10, swinging between a high of $38.40 and a low of $27.64. Trading volume hit roughly 86.9 million shares.
The selloff came after Alphabet unveiled “Project Genie,” an AI model designed to create interactive digital worlds from brief prompts. Joost van Dreunen of NYU Stern School of Business noted that AI-driven design might begin producing experiences “uniquely its own,” moving beyond just accelerating conventional workflows. (Reuters)
Google announced that access to Project Genie is now being rolled out to U.S. subscribers on its AI Ultra plan. The company describes it as an experimental research prototype available through Google Labs. According to Google, the “Genie 3” model “generates the path ahead in real time” as users navigate a scene, simulating physics and interactions. (Blog)
A game engine serves as the software foundation that lets developers combine graphics, sound, and physics to make games run properly across various devices. If prompt-driven tools take on more of that workload, studios might reconsider both their purchases from engine providers and the costs involved.
Other gaming stocks dropped as well. Take-Two slid 7.9%, Roblox tumbled 13.3%, while Alphabet’s Class A shares ended nearly flat.
Project Genie isn’t ready to slot directly into studio pipelines just yet. According to The Verge, the current build churns out 60-second interactive clips without sound or clear objectives. Plus, developers can’t simply import its output into Unity or Epic Games’ Unreal Engine. Diego Rivas from Google DeepMind told the outlet the model “was trained primarily on publicly available data from the web.”
Several analysts say the market overreacted. William Blair’s Bhavan Suri called the selloff “overdone,” pointing to “shoot first and ask questions later” fears around AI uncertainty, according to Investing.com. (Investing.com Australia)
Unity, based in San Francisco, provides software aimed at developers for building games and interactive content, while also offering tools to monetize users through ads and other services. According to Reuters data, the company divides its platform into Create and Grow segments. (Reuters)
Modeling the downside over a weekend is tricky. Should Google broaden access and demonstrate a clear route from prompt-built worlds to full commercial games, investors might continue to undervalue engine and tools providers. But if the technology remains more of a demo than a production-ready tool, Friday’s sell-off could turn out to be overblown.
The debate is part of a wider move to automate game development amid rising costs. A Google Cloud survey released last year showed 87% of videogame developers rely on AI agents to speed up tasks, as studios aim to trim expenses following broad layoffs. (Reuters)
U.S. markets are closed for the weekend, leaving the next update for Monday, Feb. 2. Investors will be watching to see if Unity holds steady after Friday’s drop or if the decline deepens as new comments emerge.
The next catalyst is just around the corner. Unity is set to report earnings on Feb. 11, according to Investing. Investors will be watching closely for updates on demand for its tools and ad services, as well as how management intends to steer the company amid the rise of AI-driven content creation.
