Why this AI Software Stock is an EASY 3x from HERE.

Can this small software play 3x or more from here? Especially through a potential short squeeze or just straight up improvement of the underlying business thanks to a gent artificial intelligence. Well, in this video, we're going to break down exactly what this company is up against, what the expectations from Wall Street are, and the valuation of the company. So, let's just jump right into it. I do want to shout out uh this particular poster here. Uh Curado who posted a day ago, could UiPath short squeeze? Kevin has been mentioning the software bottom for a while and the sector has been gaining momentum in the last couple of weeks. I noticed short interest in path spike in the last few days to almost 30%. It's now over 30%. What's everyone's thoughts on the potential for a short squeeze? This, by the way, in the Meet Kevin community tab. So, I'm picking these questions uh that I'm lately making videos on from the community tab. If you want to post a question, just download the app in the app store. It's totally free. Just type in meet Kevin into the app store. It's pretty simple. [laughter] All right, folks. Let's get into it. So, the first thing that we have to know about uh this company is a little primer on how this works. Otherwise, it could be a little confusing because when people hear software companies, they immediately think, "Oh, okay. Artificial intelligence is going to destroy them. That's it. It's the end. They're going to get crushed." So, here's how UiPath functions and what the goals are. I'm going to make also some comparisons to Palanteer. Palanteer obviously is in this beautifully delicious position where they could literally grow customer count by like 3% which is roughly what they're doing now. Their customer count growth has plummeted, but their net revenue retention has skyrocketed. So what they're really doing is they're selling more to their existing customers at even higher margins. Like really impressive, but it makes sense because once people are in your software ecosystem, they are obviously there because they perceive a return on investment. And so then it becomes easier to sell to those companies more tools from your software, right? And Palanteer is really goated at this. Uh, and so every kind of software company I feel like I compare to, I I compare to Palunteer because I think Palanteer is so good and it has such large PP. Everyone else's pricing power is just relative to Palanteer. [laughter] But anyway, uh, UiPath is one of those. Now, obviously, you have to understand UiPath is a significantly smaller company. Palanteer, for example, right now is almost half a trillion dollar company at about $420 billion. 418 to be exact. UiPath is sitting at $8 billion. So we are talking about a company that is 52 times smaller [laughter] than Palunteer. All right. So here's generally how I view artificial intelligence. When you have artificial intelligence like chat bots, uh you could be 98% good, especially on some of the frontier LLMs, but the hallucination still occurs. That's understandable as long as you know that's occurring. But there are some places, especially ones that are compliance focused like a broker dealer, a financial advisor, a bank, where transactions have to be processed with 100% accuracy, right? Like imagine if a bank just hallucinated on your check deposit [laughter] and uh dep gave you less money than you owed. Maybe it'd be okay if it hallucinated to the upside, but for some reason it seems like when they're hallucinations, they're always to the downside [laughter] or a hospital with drug dosing or an insurance claims process, right? These companies require 100%. So 98% is not good enough for high compliance uh departments uh especially ones that are subject to a lot of regulation. So again, banking uh the financial oversight organizations like FINRA, the SEC, they require 100% compliance all of the time. Banking, right? So uh this is where UiPath comes in with something called uh robotic process automation. I kind of think this is like the discount version to Palanteer's ontology. I'm sorry for continuously making the comparison but you know Palanteer's technology really started with uh a version of robotic process automation if you will like all right let's uh uh let's organize workflows in a way where software can make things easier for us and if we can extract language data to help us process uh some of these automations great. Obviously with the advent of neural nets and artificial intelligence, we've been able to now incorporate those and sort of combine into an overall stack what Poundier calls sovereign AI the combination of those automations which are deterministic and LLM which have the potential of hallucinating. So non-deterministic, they're probabilistic like we're probably right. Those differences matter. That's why I bring them up. So the point of uh UiPath is that originally it was always only an RPA play. There was no AI. And so now what the company is trying to do is they're trying to transition to say look we'll do RPA and we'll include AI. And the way we might include AI is let's say you're running an insurance claims process and somebody submits a claim. Okay cool. So a claim gets input. Well, the company can automatically using robotic process automation go okay policy number um you know coverage date are they in coverage what type of policy is this is a claims made policy or a different kind of policy right uh do we have coverage for this particular item if there's an interpretation that's needed uh you know we could check off all those boxes if there's then an interpretation that's needed the automatic process can run it through an LLM which I've highlighted in light green here because that's where our token usage occurs. It can then ping a human which is called human in the loop who can then confirm the sort of red flags or flags identified by that AI. Uh and then the human can decide okay what direction are we going to go? Are we going to deny this PL claim or are we going to keep processing it? And then the next automations can occur. Some of these things are called token lists. I've kind of underlined those in purple. So they don't rely on tokens, so lower expense. And some require tokens, which are underlined in that light green color. Now, with the release of things like Quen 38 from Alibaba, which has over a million downloads already, and it just came out yesterday morning, we expect that you're able to get closer to frontier level AI quality for really cheap token costs because you're looking at open weight models that you could run at AWS or wherever much cheaper, more cheaply than you could run like a Fable Max over at Claude. And these things are already getting pretty good. So the point is UiPath is undergoing this transition where we go from just that pure robotic process automation to robotic process automation with artificial intelligence which is exactly the transition that Palanteer went through except Palanteer started with those sexy freaking government contracts that people are like oh there's no way they're going to get replaced and they've created so much marketing with that they basically don't have to pick up the phone or send emails to get customers. People are line lining up at the door to be a customer. UiPath is different. It's like the little stepchild that's like, "Hey, you guys want to try UiPath?" You know, like it's it's the OG sales kind of company. So yeah, I mean it's it's a lesser product at this point. The question is and the big thesis for the company is can you have a UIP path approach uh the quality of Palunteer? I'm not saying replace, I'm saying approach and be that company that provides RPA plus AI for health care, finance companies, hospitals, insurance companies who can't get their phone call answered by Palanteer [laughter] right? So it's like the next best thing who's like willing to go whatever you need will help you. In fact, UiPath is now using forward deployment engineers which Karp has always been harping on over how great it is that they have forward deployment engineers. This is like a fancy way of saying, "Yo, look, we'll take some Palunteer engineers. will basically go infiltrate your company and we'll help you set the stuff up so you could use our product in the best way possible as fast as possible reducing what is called time to value from the software and then the companies are like oh damn so I don't even have to spend money on the engineers you guys are going to set this up for us we're just going to save money sign me up baby well UiPath is now doing that as well okay [laughter] that's what's exciting so what do we got actually in terms of numbers from this company. All right, so they've got earnings coming up at the beginning of September, so in about two and a half weeks. This was their last release. Uh actual numbers versus cons uh consensus estimates. We can see revenue beat by about 5.2%. Operating income up 15%, annual recurring revenue only grew by about.3%. And this is where we've got to do a little bit of talking. The company is focusing on expanding their margins by selling to big companies rather than just selling to the little boys. In fact, the attrition that UiPath is experiencing, some bears are saying, "Oh, this is a sign that AI is killing software because the small to medium businesses, they are trying to cut costs, so they cut out everything that isn't giving them their perceived ROI." Well, that sounds like a bad thing. And in fairness, maybe it is. UiPath customer count declined from 10,860 in October of 25 down to 10,550. So I mean, what is that? 10,550 divided by 10,860, that's almost a 3% decline, like a 2.85% decline. But Palanteer's customer growth also slowed. And when you compare the two companies, you see a linkage. You see, wait a minute. Why is that happening? It's actually logical. It could be wrong, but it sounds logical. Remember, nothing in my videos is personalized financial advice for you cuz I don't know your situation. But existing customers who are in the system understand the power and they almost sell themselves more upgrades. That's what's happening at Palunteer. And guess what happened at UiPath? Customers with $100,000 in spend grew by 11%. To 2,624 customers. That's literally $262 million in annual recurring juice for high margin software and it's growing at 11%. Customer counts with $1 million of spend grew 18% to 374. That's $374 million right there. And it's growing. Net revenue retention is up to 109%. It's not like Palanteer's 150%. And this is the first sequential improvement we've had in like three and a half years. Wells Fargo thinks it's going to go negative again. Why? Because the SMBs are bailing out. The small cheapies are bailing out. And it makes sense. This is what's happening at into it as well. You have to think about this. Put your small business hat on for a moment. Most small business owners make an average of less than $80,000 per year. They're basically working the 5 to9 grind for what they could probably get as a salary somewhere else. And that's the crappy thing about small businesses. It's really hard to actually make a small business really profitable. Some people can do it, but even if you're making a million dollars in profit a year, are you going to spend a hundred grand on UiPath? Maybe, but probably not. And you're certainly not going to spend a h 100red grand on UPath if you're making 80 grand a year. There's just no money. You just got to cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut cut and hope the LLMs can can carry you through and you accept the hallucinations because you really have no choice. You're just trying to survive. So this company's got earnings coming up on September 3rd and the big flag that's coming from the institutions from you know the suits and this is kind of the expectation that you're up against the following. Needm has a price target at this company of only $15. My price target at this company is way higher. We're going to go through my company uh price target in just a moment. But they say here management thinks coding agents expand their total addressable market by reducing how many developers are needed to implement and maintain automations. In my opinion, this is absolutely reasonable by the way. But NEM's only at 15 bucks because they're like, eh, we still need to wait and see to see if AI is actually going to be a key differentiator and help them grow. Okay, so NEM's like, eh, you know, we don't really have an opinion here. We're just kind of wait and see. Well, as far actually, this is UBS right here says, we met within, you know, the company and we left feeling better that the business was stabilizing. Core automation is seeing pull through from AI unlocking more automatable workflows. A sentiment we've also heard from PATH's largest competitor. Pat's new coding agents could be a key catalyst for accelerating development. and token optimization through open weight models can also help them reduce some of their costs. But the key for the stock from here will be if new annual recurring revenue can indeed accelerate much more meaningfully and then they believe the stock can rerate up. Okay, so in other words, so far the suits are kind of like eh this is a wait and see. You know, their annual recurring revenue didn't grow that much. They only grew it by like $30 million, which is still $30 million of annual recurring revenue, but you know, we're not really seeing the big growth yet. Maybe it's coming. The reason I bring this up is the suits are telling you, they're literally on the sidelines going, "All right, let me know when you guys figure it out." But by then it could be too late. The stock ends up rerating to 30, $40, $50. And then the suits are like, "Huh, I guess we should upgrade the stock." [laughter] Okay, so uh anyway, uh let's see what some of the other suits have to say over here. Uh you've actually got an upside scenario from UBS of only $20. I love it when the suit expectations are low, by the way. Downside they put at $10, bro. It's already been at $10. In fact, we have this ridiculous line right here on UiPath at $9.38. That's like your entry price. Uh, you know, your best case entry price. Look, look at this. Bounce, bounce. That was it twice in 2025. Bounce, bounce, bounce. I don't think you could ask for a better line. What's happening recently is the stock is really rallying. In fact, on the daily, the moving average, we're at overbought. We're almost overbought on the weekly. But look at the retracement of this. Ever since it IPOed back in the heyday of 2021, this poor stock has been a dog. [laughter] We are still not even at the first retracement level of this stock. This is so early if this company can prove that they've bottomed and they're recovering. And so that's where I look at this and I'm like, man, that's a really good floor. There is a real recovery story here. Short interest is high, huh? Okay, let's go look at the financials for the company. Oh, let's go do that. Let's pull up the financials. So, let's go sort by path. This is uh this is what course members see, by the way. Uh, okay, good. So, this is the path piece. Let's go to the this is more on robotic process automation. Let's go down to the financial statements we broke down and the earnings call. Uh, so here's their cash flow statement. First thing we could see on the cash flow statement is we are sitting at a positive net income ending April 30th of $22 million. So we've really transitioned out of losing money. Worth paying attention to as they've sort of rejiggered some of the company. Net cash provided by operating activities up 10.8%. They really it's all pretty much free cash flow. So you've got about $130 million in just three months of cash flow. Uh 130 * 4 is about half a billion dollar of cash flow per year. 520 divided by $8 billion works out to about a 6.5% cash flow yield. That's actually really good. Salesforce is better at probably I probably still somewhere over 10%. But Palanteer is somewhere around 1%. So cash flow yield shows you just purely based on how much money they make like cash they generate compared to their market cap. What's the yield, baby? What do we got? Okay. So, uh then we've got repurchases of common stock. They repurchased um between $9 and $15 about $250 million worth of stock. That's that's nice. So, we've got um you know, it's not like we're raising money. We are uh and again, I think you know, it's okay to raise money if you're putting that towards productive uses like I don't know, buying discounted real estate, but they're just actively buying backstock. If I go to their balance sheet, they have about $1.3 billion in cash and marketable securities. That's pretty good. I've got bills of about $260 million, which means we have over a billion of free cash, and they only have $12 million of other debt. So, this company's literally generating a 6% cash flow yield to their market cap, and they're sitting on over a billion dollars of cash. That's really secure. I mean, anything could go wrong, but that's pretty secure. License and subscription revenue up about 16.3%. Total revenue growth up 17.3%. Licenses for their software sit at a 99.9% profit and an 82% margin on their subscription services, which are, you know, the larger portion of the revenue. Although licenses make up about 150 million, which is pretty dang good, too. Because you could basically just license the software and then you develop it all yourself. subscription services is a little bit more involved with those four deployment engineers. Their uh operating expenses have uh been declining uh well not overall it actually I would almost call this flat. You're up about 1% on operating expenses. Uh R&D maybe down a percent maybe down a little percent over here on GNA but sales and marketing did increase about 5%. But that's only a 5% increase in marketing when your revenues are up 17.3%. So you're making, you know, you're getting three times as much growth for that money you're spending on sales and marketing. Some of the four deployment expenses might also be sitting in sales and marketing. Not uncommon where they kind of place these things. Uh so we're back to profitability. Hopefully we are for this next quarter as well because you're barely a profitability at 4 cents for the quarter. The company is expected to have 78 cents of earnings by the end of the year. And that's where we could actually get to some of the forecasts. So if we go to the stock AI tab, which is our uh custom and proprietary at Reinvest artificial intelligence, it's it's very early beta, but basically what it is, it's a combination of algorithms and AI, right? So we combine those the way I do analysis and structure it together so it can kind of look at a stock the way I do. That's the goal. It gets better every day. This is, by the way, the same thing that we do over here. We use a lot of artificial intelligence plus algorithms plus waitings to create a really good real estate software. I just did a breakdown on the real estate housing market and this, you know, $200 to $300,000 profit deal that I found from uh from the app. And you know, it took me like 30 seconds to find the the deal, which is crazy because it's just just like, oh my gosh. [laughter] Like, I'd love to spend 30 seconds and pick up hundreds of thousands of dollars. Obviously, you got to go buy the property and renovate it, right? [laughter] But anyway, so I've got a fair value at UiPath from the AI at uh $45. That's based on our custom algorithms. If I do the math right now, I get to about $50. So, we're pretty close. We're within 10% of my estimate. The way that I achieve this estimate, by the way, is I take the Wall Street earnings of 78 cents. I take Wall Street projections at 22% growth. Uh I actually use 25% growth for my estimates. That could be why. And so I get to a price target of $52 for the stock at fair value. The thing is, this is more than just a fair value play because what happens is if we actually end up getting to $52, we're going to be right on that uh 49 on the retracement curve, it'll probably push past that to like, you know, reject at 59 or 72 if the company can prove it. You know, it's still a big there is still in fairness a prove me story here. Uh but if we go back to this tab right here, we could see that the moving average is getting aggressive. It's becoming a uh yellow flag. We still have the prove me story and pricing power. The balance sheet is excellent. The valuation is excellent. Okay, we know we got elevated short interest. And if we look at some of the insights over here, the insights are that AI components were integrated in 16 of the top 20 deals. Fantastic. Expansion of AI contracts is commanding six times the size of a traditional contract. Huge. This pricing power stems from customers prioritizing endtoend process organiza orchestration over isolated task automation. In other words, let's get all of our robotic processes and algorithms to work together to get to one final result. It's sort of like that insurance claim process I talked about at the beginning. That's great. That's fantastic. Let me look at bearish really quickly. So bearish over here. Uh how much do we rely on tokens? Basically fair, but I think less. I don't think that's a big of that big of a deal because you know costs are coming down substantially with tokens. So I think we'll be able to get more productivity with more profitability for this company. Enterprise uh landscape is consolidating. This is the whole software thesis. Is it going to erode pricing power? Reasonable risk. Uh if I expand some of these signals over here, let's expand some more red flags over here. forward deployment deployed engineering model requires highly specialized talent embedded into other environments creating complex uh complexity and burnout risks less worried about that if the stock is going up usually employees are happy [laughter] you know it it's simp simple foreign exchange volatility nobody cares uh contractual evolution reduces upfront capital expenditure barriers basically AI is actually making it easier and cheaper to build out this software This is something we're starting to see in their earnings call as well. A lot of pilots are beginning now. They're saying we feel really good about the momentum. I think Agentic and AI products in general have a really good set of strong momentum. Consumption based revenue is a small portion of what we do, which is good because again, you know, you don't want to spend so much on just tokens. So, we looked at the financial statements. What else we have here? uh a probabilistic technology is not architecturally meant to follow dozens of steps and sometimes hundreds of steps in the same order in the same sequence. This is them just explaining the difference between robotic uh process automation and um you know AI that could hallucinate. An agent can replicate steps that are deterministic, but why would you use an agent and consume tokens if you could literally just use a script which is robotic process automation. AI is useful on some things and that's where you should use AI but you should only use AI where you need to use AI is essentially their argument here which is fantastic. So um so far this is this is fantastic. Uh you know there's uh Zach's research on this company. This is all in our stock tab for course members. UPath is making meaningful progress in agentic uh adaptation adaptation. Zach says path helps coordinate workflows between agents and connecting AI outputs. Uh Zach's consens consensus estimate for fiscal 27 earnings have risen. Debtree balance sheet. Well, it's not quite debtree, but it's close to debtree. It may as well be. They've got so much free cash. Blah blah blah. Uh financial services know your customer. Early adopters report massive 60 to 80% reductions in case handling time using MA maestro uh case management. That's one of their their products. So there's a lot to like here. Uh I think on a technical basis the floor is in around 10. I don't know that we're going to return to that level. Obviously not personalized financial advice, but I'm pretty excited about this company. I know I call it sort of the discount Palanteer, but you know at 52 times less expensive, I don't necessarily think that's a bad thing. I actually think that creates dramatic upside once the market and the suits wrap their head around, oh wow, this company isn't going to get replaced by software. This company is saving people money with software. This is exciting. So, I think that could be a gamecher. Uh anyway, if you want more of this analysis or you want to uh ask me a question directly, just post in the community tab. Remember, you could get that from the Meet Kevin app, just download that in the Apple or Android app store. And if you want, after you log in to the Apple or Android app store, and you make your username and password, or you just sign in with Google or Apple, whatever you're comfortable with, you can then go to app.mmeke.com, uh which is where, you know, you get the different data tabs or whatever. And when you log in over here, so when you get this screen, sign in with the same username or password and then you're in, then you're deep, which is great. That's what you want. Uh so then you can use the desktop app as well, which is really cool, especially because in the desktop app, we also have the alpha wire service. Uh if you haven't seen the alpha wire service yet, I'll just show you a quick example. So my goal is always just providing more value with everything that we're doing. If you go to Alpha Wire right here, you could literally get Oh, look at this. Breaking as of seven minutes ago. Nvidia in talks to invest three billion in SB Energy as part of OpenAI data center deal. Cute. Magnitude six earthquake strikes. Whatever. You can kind of go through here. I wonder if there's been any news in the last couple days. You could throw in tickers here as well. Oh, look at that. Oh no. The chief accounting officer sold $831,000 worth of stocks. you bastard. That's okay. I mean, they, you know, maybe he wants to buy a house. You can't blame him. The stock's up like 50% in the last, you know, few weeks. Uh, but, you know, you could do this for anything. You type in SpaceX is kind of cool, too. Look at that. Peter Theal reports 5.5% stake in SpaceX. That's cute. It's kind of a cool service. And then you don't get distracted like you do on X. Sorry. I I I've gotten I've personally I've gotten so jaded. I've got so distracted on X that uh I I'm like, man, the less I can open up X, the more productive I am. So, it's kind of a hack using the alpha wire because then I can just pin this up, you know, I pull this up, I pin it up to a uh, you know, one of the other monitor screens that I have and I just let it run and it updates in the background and I'm like, this is way better than X. I don't even have to hit refresh. [laughter] Anyway, thanks so much for being here everybody. Appreciate you. We'll see you in the next one. Goodbye. Goodbye. Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. >> Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take. [music]