2 Growth Stocks Down 20% and 82% to Buy Right Now

Texas Instruments (TXN) and Unity Software (U) are identified as undervalued tech stocks poised for significant growth, largely driven by AI. Texas Instruments is experiencing a recovery, with data center sales surging approximately 50% due to AI infrastructure demand, leading analysts to project a sharp rebound in free cash flow from $1.5 billion in 2024 to nearly $10 billion by 2029. Meanwhile, Unity Software, undergoing a management-led turnaround, is leveraging AI through its Unity Vector ad platform and Unity 6 game-building software, which is stabilizing revenue and is expected to drive 25% annualized free cash flow growth through 2029, suggesting its current $15 billion market cap is conservative.

Analysis

Texas Instruments (TXN) is demonstrating a significant turnaround, driven by robust data center demand. After nine consecutive quarters of revenue declines, Q2 revenue grew 9% quarter-over-quarter, marking back-to-back year-over-year growth, fueled by AI infrastructure investments that propelled data center sales by approximately 50%.

This performance validates TXN's competitive advantage in analog and embedded chips for AI. Analysts project total revenue to grow 10% annualized over four years, with free cash flow (FCF) expected to rebound sharply from $1.5 billion in 2024 to nearly $10 billion by 2029, sustaining the 3% dividend yield.

Unity Software (U) is undergoing a significant turnaround under new management, leveraging AI for performance stabilization and future growth. Despite trading 80% below its peak, the stock is up 62% this year, with recent quarterly revenue showing slight sequential growth, and CEO Matthew Bromberg anticipates 2025 as an "inflection point."

Unity's new AI-powered ad platform, Unity Vector, has "far exceeded expectations," boosting user engagement. Its Unity 6 game-building software, enabling text-prompt virtual world creation, saw 6.6 million downloads, up 50% QoQ. Analysts forecast Unity's FCF to grow 25% annualized through 2029, from $286 million to $866 million, suggesting its $15 billion market cap is conservative.

Key Decisions for Investors

• Investors should evaluate Texas Instruments (TXN) for its significant free cash flow rebound, projected to reach nearly $10 billion by 2029, driven by strong AI infrastructure demand and its attractive 3% dividend yield.
• Unity Software (U) warrants consideration as a growth play, given its successful AI product integrations, management-led turnaround, and analyst forecasts for 25% annualized free cash flow growth through 2029, suggesting undervaluation.
• Given the positive outlooks, investors should conduct further due diligence on both TXN and U to assess the long-term sustainability of their AI-driven growth trajectories and associated market risks.