Unity Software Inc. (NYSE:U) stock rose about 2% Thursday after Raymond James upgraded the stock, citing the company's recently announced partnership with Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google.

The gains came despite broader market weakness. The Nasdaq fell 0.47%, while the S&P 500 declined 0.27%.

Raymond James Upgrades Unity Following Google Partnership

Raymond James analyst Andrew Marok upgraded Unity Software from Market Perform to Outperform and set a $54 price forecast.

Marok cited Unity's recently announced partnership with Google as a key factor behind the upgrade. Meanwhile, Freedom Capital Markets maintained its Buy rating Thursday with a $48 price forecast.

Marok said his outlook on Unity had already improved following stronger-than-expected performance in its Grow business. Growth in Vector and improving operating leverage exceeded initial expectations.

However, Marok had concerns about Unity's ability to retain creators and content developers as platforms such as Roblox Corporation (NYSE:RBLX) and generative AI tools make game development easier.

He said the Google partnership addresses those concerns by combining Unity's development and runtime technology with Google's artificial intelligence capabilities and consumer reach.

With greater confidence in Unity's interconnected Create, Runtime and Vector businesses, Marok now sees a more favorable risk-reward outlook for the stock.

Unity's gains stood out as technology stocks declined 0.62%. Only three of the S&P 500's 11 sectors advanced, while the market's advance-decline ratio stood at 0.4. Energy led gains, rising 2.91%, followed by consumer staples at 1.31%.

Technical Analysis: Unity Maintains Bullish Momentum

Unity shares remain above their key moving averages, signaling continued strength.

The stock trades 7.5% above its 20-day simple moving average (SMA) of $42.96 and 44.6% above its 200-day SMA of $31.93.

Additionally, its 20-day SMA remains above its 50-day SMA of $42.51, supporting the near-term uptrend.

The stock formed a golden cross in August when its 50-day SMA moved above its 200-day SMA. This technical pattern often signals improving long-term momentum.

Meanwhile, the moving average convergence divergence (MACD) indicator remains above its signal line, suggesting continued buying pressure.

Traders are watching $48.50 as the next resistance level, while $40 represents a key support area.

Unity also has a bullish market data momentum score of 96.67, reflecting its strong price performance.

Earnings Outlook And Analyst Expectations

Unity's next earnings report is tentatively scheduled for Nov. 4.

Analysts expect earnings of 3 cents per share, down from 20 cents a year earlier. Revenue is projected to reach $563.80 million, compared with $470.62 million in the year-ago period.

The stock carries a consensus Buy rating, with an average price forecast of $46.93.

Unity also has exposure through gaming and technology-focused ETFs, including the VanEck Video Gaming and eSports ETF (NASDAQ:ESPO), Innovator Deepwater Frontier Tech ETF (NYSE:LOUP) and Roundhill Metaverse ETF (NYSE:METV).

U Stock Price Action

U Stock Price Activity: Unity Software shares were up 2.01% at $46.35 at the time of publication on Thursday, according to market data.