NEW YORK, Jan 30, 2026, 18:20 EST — After-hours
- Unity shares dropped 24.2%, closing at $29.10 in after-hours trading.
- The drop came after Google introduced “Project Genie,” a tool that creates interactive worlds from text prompts or images.
- Investors are turning to Unity’s Feb. 11 earnings for clues on demand and potential competitive threats.
Shares of Unity Software Inc plunged 24.2% to $29.10 in after-hours trading Friday, after fluctuating between $38.40 and $27.64 during the session.
This selloff followed Alphabet’s Google unveiling “Project Genie,” a research prototype enabling users to generate and navigate interactive worlds using text prompts or uploaded images. (Blog)
This shift is significant as investors begin factoring in a quicker overhaul in game development. If AI can whip up playable worlds more rapidly, studios might cut down both time and costs spent on the traditional tools they’ve relied on for years.
Unity is caught squarely in the crosshairs. Its software powers countless developers crafting games and interactive content, meaning even minor tweaks in the toolchain can send forecasts and valuations spinning.
In afternoon trading, the selloff spread to other videogame stocks as investors debated whether AI world models might actually slash development time and costs. Game engines—the software frameworks that control a game’s physics, lighting, and rules while developers build—are central to this shift. Joost van Dreunen, a games professor at NYU Stern School of Business, pointed out that the real breakthrough will come when AI begins crafting experiences that are “uniquely its own,” rather than just accelerating existing workflows. (Reuters)
Not everyone is convinced by the panic. Dylan Becker of William Blair pointed out that investor worries “overlook the complexity and sophistication” of Unity’s engine and said the launch of Google’s tool doesn’t wipe out the advantages Unity holds today. (MarketWatch)
A Google spokesperson told The Register the prototype “is not a game engine and can’t create a full game experience,” noting that current sessions remain brief and early demos still show clear limitations. (The Register)
Unity holders have a key date ahead. The company plans to release its fourth-quarter and fiscal-year 2025 results before markets open on Feb. 11. A webcast will follow at 8:30 a.m. ET. (Unity)
Friday’s sell-off tightens the margin for error. Should AI-native tools advance quicker than anticipated, or if developers redirect spending to new pipelines, Unity could encounter stiffer pricing pressure and slower growth in its main creation segment.
Traders will eye Monday’s open closely to see if the selling pressure eases or accelerates. All eyes then shift to Feb. 11, when Unity is set to provide guidance and possibly shed light on its strategy amid AI world-building’s shift from demos to wider adoption.
