Better stock of artificial intelligence: Figma vs. UiPath

• Figma challenges Adobe with its lightweight, cloud-based AI design tools.

• UiPath helps companies automate tasks traditionally performed by human workers with software robots.

• The slower-growing company may be the safer choice in this frothy market.

• 10 stocks we like better than Figma ›

Figma (NYSE: FIG) and UiPath (NYSE: PAD) both use artificial intelligence (AI) to streamline workflows and automate repetitive tasks. Figma, which develops cloud-based user interface (UI) and user experience (UX) design tools, uses AI to generate design ideas and prototypes, automatically edit content, create summaries, and execute code. UiPath’s software robots automate repetitive tasks such as data entry, mass emails, and new customer onboarding.

Figma went public last July at $33 and is currently trading at around $37. UiPath went public in April 2021 at $56, but now trades for around $16. Let’s take a look at why neither of these AI stocks generated life-changing gains for their early investors – and whether either is worth buying now.

Figma’s cloud-based UI and UX design tools can run natively in a web browser with no local installation required, making them lighter and more scalable than traditional UI/UX development tools from Adobe (NASDAQ: ADBE) and other software makers. Their cloud collaboration features allow multiple users to work on one project simultaneously.

Figma offers a free tier for individuals and small teams, as well as a paid tier with additional features for larger organizations. Adobe nearly acquired Figma for $20 billion in 2022, but antitrust regulators forced the company to abandon the deal. About 95% of Fortune 500 companies and 78% of Forbes Global 2000 companies currently use Figma to design their applications.

In 2024, the number of Figma customers generating more than $10,000 in annual recurring revenue (ARR) increased 45% to 10,517, and the net dollar retention rate of this high-value cohort grew 12 percentage points to 134%. Total revenue rose 48% to $749 million, but posted a net loss of $732 million – compared to 2023 net profit of $738 million.

Figma is growing rapidly, but costs are rising as it expands its newer products, including Figma Draw, Figma Sites and its AI tools. Margins are shrinking as the company ramps up spending on cloud infrastructure, sales and marketing. It could also cannibalize its core subscriptions with its new consumption-based fees to attract more price-conscious customers.

From 2024 to 2027, analysts expect Figma’s revenue to grow at a CAGR of 27% to $1.53 billion, while narrowing its net loss from $732 million to $331 million. Its AI-powered creation and workflow tools – as well as integrations with third-party software and international expansion – should fuel that growth. However, with an enterprise value of nearly $17 billion, Figma’s stock is no bargain at 13 times this year’s revenue and 124 times earnings before interest, taxes, depreciation, and amortization (EBITDA), and it hasn’t proven its business model is sustainable.

UiPath’s AI robots connect to an organization’s existing software to automate repetitive tasks. It is the world’s largest robotic process automation (RPA) company, serving more than 60% of Fortune 500 companies. Still, it faces stiff competition from newer generative AI platforms, smaller RPA companies like Automation Anywhere, and tech giants like Microsoft (NASDAQ: MSFT) – which integrates similar automation tools into its Copilot platform.

From fiscal 2021 to fiscal 2025 (which ended in January), UiPath’s revenues rose at a robust CAGR of 24% from $608 million to $1.4 billion. However, growth slowed in fiscal 2023, fiscal 2024 and fiscal 2025 – when revenue grew just 9%. The company attributed this slowdown to sluggish corporate spending in a challenging macro environment, but that slowdown also coincided with the rapid growth of generative AI platforms such as OpenAI’s ChatGPT.

To increase its competitive edge, UiPath is upgrading its software robots with additional AI tools to analyze the data processed. From fiscal 2025 to fiscal 2028, analysts expect revenue to grow at a steady CAGR of 10% to $1.88 billion. They also expect it to become profitable for the first time in fiscal 2026 and remain profitable for at least the next two years.

Rather than boldly expanding its business with new investments and acquisitions, UiPath is focusing on cutting costs and streamlining its operations to stabilize its margins and profits. While its days of high growth may be over, it could continue to dominate the niche RPA market, which Grand View Research expects to grow at a CAGR of 43.9% between 2025 and 2030.

With an enterprise value of $7.34 billion, UiPath still looks like a bargain at four and 16 times fiscal 2026 revenue and EBITDA, respectively. Slower growth, competitive challenges and CEO changes are likely to put pressure on valuations, but it could grow through economic booms and busts as more companies replace their human workers with their software robots.

Figma and UiPath can both continue to grow in the coming years. However, UiPath’s rising profits and lower valuation make it the more attractive AI play in this frothy market. As for Figma, investors should consider how the company balances its growth and expenses before buying shares.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Adobe, Microsoft, and UiPath. The Motley Fool recommends Figma and recommends the following options: long January 2026 $395 calls at Microsoft, long January 2028 $330 calls at Adobe, short January 2026 $405 calls at Microsoft, and short January 2028 $340 calls at Adobe. The Motley Fool has a disclosure policy.

Better Artificial Intelligence Stock: Figma vs. UiPath was originally published by The Motley Fool