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

The article identifies Texas Instruments (TXN) and Unity Software (U) as overlooked investment opportunities poised for growth driven by artificial intelligence. Texas Instruments is experiencing a significant rebound in its data center sales, up approximately 50% due to AI infrastructure investment, which is projected to boost free cash flow from $1.5 billion in 2024 to nearly $10 billion by 2029. Concurrently, Unity Software is leveraging AI with its successful Unity Vector ad platform and new AI-powered game development tools, leading to stabilizing revenue and an anticipated 25% annualized free cash flow growth through 2029, suggesting its shares may be undervalued.

Analysis

Texas Instruments (TXN) is demonstrating an operational turnaround, reporting two consecutive quarters of year-over-year revenue growth, with Q2 revenue up 9% quarter-over-quarter. This recovery is largely driven by robust AI infrastructure demand, propelling data center sales by approximately 50% and validating TXN's competitive advantage in analog and embedded chips.

Analysts project TXN's total revenue to grow 10% annually over four years, primarily from data center expansion. This is expected to drive a sharp rebound in free cash flow, from $1.5 billion in 2024 to nearly $10 billion by 2029, supporting its current 3% dividend yield.

Unity Software (U) is undergoing a significant turnaround, with its stock up 62% this year, though still 80% below its peak. Revenue is stabilizing with slight quarter-over-quarter growth; management anticipates 2025 as an "inflection point." Unity leverages AI through its successful Unity Vector ad platform and new Unity 6 software, positioning it as a key beneficiary in digital content creation.

Analysts forecast Unity's free cash flow to grow 25% annually through 2029, increasing from $286 million in 2024 to $866 million. Its $15 billion market capitalization implies a conservative multiple of forward free cash flow estimates, suggesting potential undervaluation, underpinned by strong FCF growth and strategic AI integration.

Key Decisions for Investors

• Investors should consider Texas Instruments for long-term growth, given its projected free cash flow rebound from $1.5 billion to nearly $10 billion by 2029, driven by 50% growth in AI-related data center sales and its 3% dividend yield.
• Evaluate Unity Software for growth-oriented portfolios, noting its significant turnaround momentum, successful AI-powered product catalysts like Unity Vector, and analyst-suggested undervaluation based on future free cash flow growth.
• Monitor both companies' execution on AI integration and free cash flow generation, as these are critical drivers for their projected growth and valuation.
• While TXN presents a compelling FCF rebound story, investors should note its recent exclusion from a 'top 10 stocks to buy' list by some analysts, indicating diverse expert opinions.