Missed Out on Palantir? Buy UiPath Instead.

Palantir has been one of the hottest artificial intelligence (AI) stocks on the market. Its expertise and new product launches have been almost flawless, contributing to the stock's rise. However, there was a period when the market doubted the company, and the stock suffered.

One company that hasn't been flawless is UiPath (NYSE: PATH) . UiPath has had its fair share of hiccups, but is still a fantastic business with a great product and a massive runway. Unlike Palantir, UiPath isn't priced for perfection. In fact, it's hardly valued at all -- almost like Palantir was in early 2023.

So, if you're looking for the next software stock that could take off, I'd highly consider UiPath.

UiPath's software has a huge runway ahead of it

UiPath's product is robotic process automation (RPA) software. While this isn't an AI product by itself, UiPath has multiple AI plug-ins and capabilities to increase the amount of processes a client can automate. The software can be deployed across a business, automating repetitive tasks like creating expense reports or replying to customer service emails. Removing repetitive tasks from an employee's day frees them up to do tasks that require original thinking, which increases both productivity and morale.

RPA is a practical way to implement AI within a business and is slated to see massive adoption worldwide. According to Grand View Research, the RPA market is expected to increase from about $3 billion in 2023 to more than $30 billion by 2030. That compound annual growth rate of nearly 40% represents a huge investment opportunity.

UiPath already has a significant grip on this market and has one of the most powerful backers: Microsoft . UiPath and Microsoft have a strong partnership, and UiPath has already launched automation tools that integrate Microsoft Copilot. With many businesses running their company through Microsoft Office products, this integration and partnership is key.

The narrative for UiPath's future is quite rosy, and it's easy for investors to see how UiPath could succeed. However, it hasn't been excelling lately.

UiPath had one bad quarter, but that's not enough to write off the stock

In its first quarter of fiscal year 2025 (ending April 30), UiPath missed the mark. A key metric for UiPath is annual recurring revenue (ARR), which is how much subscription revenue it has. In Q1, ARR came in at the low end of guidance at $1.51 billion, although it still increased 21% year over year. Unfortunately, UiPath lowered full-year guidance dramatically, decreasing its guidance from $1.73 billion to $1.67 billion.

Alongside that drop was the announcement that CEO Rob Enslin was resigning. This is normally a terrible sign, but Enslin only became full CEO on Feb. 1, after serving as co-CEO since April 2022. Taking over is UiPath founder Daniel Dines, who was co-CEO until Enslin took over in February.

This transition should be fairly seamless, as Dines isn't too far removed from the role and led UiPath through years of strong growth.

While the market may see this miss and transition as a concern, I don't. This slipup may have been enough to push Enslin out the door and return power to Dines, who has a great track record. We'll get a better idea of whether UiPath can turn it around after its Q2 results, which will be available on Sept. 5.

I'm confident management can turn it around, and the guidance given for Q2 may have been artificially low so that the company can have a positive quarter after delivering a bad one.

But the damage has been done, as the stock trades at dirt-cheap levels.

PATH PS Ratio data by YCharts

A P/S ratio of 4.8 is a very cheap price to pay for a growing software stock. Although UiPath has had its challenges, I think this represents an excellent buying opportunity.

UiPath may have had one poor quarter, but that isn't a pattern. I think the market has given up on this stock too quickly in favor of flashier AI software names. This provides an excellent opportunity for long-term investors, as UiPath is still well-positioned to grow into a behemoth .

Keithen Drury has positions in UiPath. The Motley Fool has positions in and recommends Microsoft, Palantir Technologies, and UiPath. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .