Discussion around unity software and broader software industry. Unity Software: clear inflection moment where both the share price has reached a psychological resistance after a series of positive news including google partnership and q3 ad spend early checks indicating positive results.
The inflection and the moment of questionning does not just appear in the share price.
This is the very moment where AI is allowing people who don't know how to code to make games.
Positives : 1. Expands Unity's user base 2. Speeds up Unity's own internal product development. 3. Unity has been in a preparation to use
runtime data for ads and unity 6 adoption keeps increasing. 4. Unity has released multiple tools including CLI and plug ins that both make it a very solid choice for ai development and allows unity to configure for data sharing automatically on newer projects (important longterm implications if holds)
Negatives:
1. AI's ability to make games without a game engine
2. AI decompiling existing software including games even at the current stage.
3. A loud population of people on social media platforms trying to promote their own offerings while rallying against game engines.
Overall it seems like there are uncertainties for the long term and net positives for the short to mid term.
Release of Unity 7 might be able to redifine the positioning of unity as this release will feature a mcuh performant runtime,
new products that unity has centered around ai for ease of use (it isn't hard to imagine that unity can offer much more than opensource tooling made with the help of ai considering it employs hundreds of engineers and has the budgets and capabilities that go beyond usual).
And live ops solutions and backend offerings that might potentially help strenghten the ecosystem effect.
In short: Stock and company at an inflection point that will impact both the companies main trajectory and public sentiment. Overall positive as markets and public does not pay attention to
Unity 7 combined with network effects unity will create through new liveops offerings and are fixated on Unity vector. Execution has been strong. Main catalyst unity 6.7 and Unity 7 release in 6 months.
Observatory
My notes on stocks, dated the day I wrote them. Once written, they are never changed.
The point is to look back later and see how the market, and I, were thinking at the time. Not investment advice.
3 of 3 notes, most recent first
- U10 Oct 2026$46.88 close 9 Oct 2026Since this note: U -12.1% · S&P 500 -0.7% · to 21 Oct 20262 unusual days since, the biggest -11.2% on 14 Oct 2026.
- TSM10 Oct 2026$453.31 close 9 Oct 2026
Discussion around broader AI trade and Taiwan semi. As an outsider to the industry who does not have any technical knowledge my current impressions around the future and valuations are:
1. No bubble in price unlike prior market bubbles in history when a new technology emerges. There are 2 clear and totally opposing group of thoughts. Market is very efficiently trying to price the assets between those, assuming growth but not a sustainable one for companies like NVIDIA while assuming sustainable and steady demand for energy, materials and similar industrials making the valuations of some related companies expensive as they are deemed s
2. NVIDIA circular financing is real, but it might not be a net negative if AI becomes much more critical.
3. The easy assumption is that unit demand and compute demand will rise, while prices will drop because of more competition and more efficient GPU-CPU models. That creates an uncertainty for NVIDIA.
4. Model layer appears to have no strong moat which makes SPACEX, OPENAI, ANTROPHIC and a very big chunk of private market startups who are on paper at very high valuations the cause of initial concern. As this posses a threat for all of their investors and companies that has signed deals with them.
5. Overall it is clear that the only way the broader AI sector sustains these valuations is the benefits of ai expanding to the end consumer, so these investments do not get financed with debt which is something even hyper scalers have started to do as they turn cashflow negative.
I view TSM and ALPHABET as core longterm investments for the future as TSMC benefits from unit demand and has a diversified portfolio and a customer set.
Alphabet is expanding into every industry it can, which I see as an octopus like company that has built its own AI ecosystem beyond software with its own TPU's and ongoing work around that.
The timing however seems to be critical as it is clear that an implosion of frontier lab valuations, combined with the entire private markets and the cash flows turning negative will not just impact these companies directly (Google holding a huge position in spaceX and antrophic) but the broader economic consequences could also be dire.Since this note: TSM -4.7% · S&P 500 -0.7% · to 21 Oct 2026No unusual days since. - U3 Aug 2026$31.71 close 31 Jul 2026
Unity software dropped 4.8% yesterday in a sympathy reaction to roblox's earnings which dropped 27%. Unity software reports in 3 days and if the expectations and early signals are not negative, there is a high chance that the stock recovers the sympathy drop before earnings. The outcome of the results are unclear as there is limited data and the earliest indicator in an ad network's performance is the company's earnings report rather than actual advertiser experience and reports which clearly did lag quite a lot during applovin's turnaround. Monetizer experience catches up slightly earlier but there is no source of data which has a large sample of monetizers for now.
Sensortower's report was inconsistent even with the historical results and I suspected the reason was the small sample size. Turns out the firm did purely rely on vibes and even considered applovin's historical results as the basis of their data for 6 months ago. The guest from sensor tower that was supposed to explain how their data showed unity adnetwork's share of wallet going down 30% in a quarter or less wasn't even aware of unity's reported growth in the past few quarters which might indicate another bullish stance on unity interms of the turnaround not yet attracting any public attention.Since this note: U +30.0% · S&P 500 +3.5% · to 21 Oct 20264 unusual days since, the biggest +15.1% on 6 Aug 2026.