New York, Feb 2, 2026, 04:45 EST — Premarket
- Unity shares climbed roughly 0.8% in premarket trading, rebounding after Friday’s steep drop linked to Google’s “Project Genie.”
- Investors are debating if “world model” AI tools might cut into demand for conventional game engines
- Unity’s results on Feb. 11 will be the next key checkpoint for management’s AI story and ad revenue growth
Shares of Unity Software Inc edged up roughly 0.8% to $29.32 in Monday’s premarket, following a Friday close at $29.10. (Investing)
The bounce was modest, yet the debate rages on. Traders wrestle with how to value a novel threat: AI systems that create interactive worlds from simple prompts. The question remains whether these can evolve into genuine rivals for traditional game engines.
A “game engine” is the software layer that developers rely on to get games running, managing everything from physics to lighting and object movement. Unity’s Create tools operate within this core framework, which explains why Friday’s market response was so intense.
The selloff kicked off when Alphabet Inc.’s Google unveiled Project Genie, an AI model that generates interactive digital worlds from text or images. The move sparked concerns about potential disruptions in the videogame production pipeline. “We’ll see a real transformation … once AI-based design starts creating experiences that are uniquely its own,” said Joost van Dreunen, games professor at NYU Stern School of Business. (Reuters)
On Jan. 29, Google revealed in a blog post that Google DeepMind’s Genie 3 “generates the path ahead in real time” as users navigate a scene. Project Genie, described as an “experimental research prototype,” is now available to Google AI Ultra subscribers in the U.S. The company also noted some drawbacks, such as limited generation windows and control restrictions. (Blog)
Unity CEO Matthew Bromberg aimed to ease concerns, emphasizing that world-model outputs remain “probabilistic and non-deterministic,” not ready to replace production-level game mechanics. “We see this not as a risk but as a powerful accelerator,” he said in a post on X, according to TheFly. (TipRanks)
Some Wall Street analysts echoed that sentiment. Bhavan Suri of William Blair called the move “shoot first and ask questions later” on AI concerns, labeling the selloff as “overdone,” per an Investing.com report. That same piece noted several firms have recently updated their ratings, highlighting ongoing disagreements over Unity’s valuation and growth prospects. (Investing)
Still, the risk scenario is clear: despite Project Genie being in early stages, investors see “world models” as a sign that content creation might become cheaper, quicker, and more automated. If that changes bargaining power in favor of platforms controlling the AI models—or drives prices down for creation tools—Unity’s engine business could take a hit.
Bulls face a timing challenge. Unity’s shares don’t need a product launch to shift—they can jump on demos, developer buzz, or small upgrades, particularly in a market that’s hypersensitive to anything tagged “AI.”
Unity is gearing up for its next major event. The company plans to release its Q4 and full-year 2025 results before U.S. markets open on Feb. 11. A webcast will follow at 8:30 a.m. ET — a key moment for investors to grill management on competitive risks and demand trends after Friday’s sell-off. (Unity)
