Why Paycom and UiPath Win When Markets Ground Investment Decisions in Reality, Not AI Hype

When Anthropic unveiled Cowork—an AI feature that extends Claude’s coding abilities to general tasks—software stocks faced an immediate selloff. Market participants panicked, fearing that artificial intelligence would render traditional software obsolete. But investors who focus on grounding their decisions in actual business outcomes rather than theoretical AI disruption may find compelling opportunities in this chaos.

The software industry will undoubtedly transform as AI capabilities advance. Yet history shows that companies adapting their business models to deliver verified, measurable results tend to survive and prosper. Two stocks worth watching are Paycom (NYSE: PAYC) and UiPath (NYSE: PATH)—both of which have demonstrated they can thrive even as the AI landscape reshapes their competitive environment.

The Paycom Model: Proof Through Disruption

Paycom has already shown it understands how to reinvent itself. In 2021, the payroll software provider launched Beti, an automated platform allowing employees to handle their own payroll processing. Rather than merely selling software features, Beti delivered a tangible outcome: fewer errors, less administrative burden for employers, and transparent value that customers could measure directly.

This outcome-focused approach proved so effective that early revenue from other Paycom offerings actually declined—a testament to how thoroughly Beti captured customer attention. Yet the company chose long-term value over short-term revenue maximization. That willingness to disrupt its own business demonstrates a management team grounding strategy in customer results, not product inertia.

More recently, Paycom introduced IWant in mid-2025, an AI-powered interface letting users query their data through voice or text. By grounding this new capability in Paycom’s unified database architecture, the company ensures reliability: users get actual information, not AI-generated guesses. CEO Chad Richison called IWant “the biggest release since our founding in 1998,” signaling confidence in the product’s market impact.

Paycom’s financial profile reflects this disciplined approach. While revenue growth of 9% year-over-year in Q3 2025 may seem modest, the company maintains a 22% GAAP net income margin—evidence of sustainable, profitable operations. At 16 times projected 2025 earnings, the stock’s valuation appears reasonable for a company with genuine competitive moats built on customer outcomes.

The primary risk isn’t AI technology itself, but rather broader economic effects. If AI-driven efficiencies trigger widespread layoffs or business contraction, hiring may slow, and payroll services demand could weaken. That said, Paycom still captures only a fraction of the $2 billion+ payroll and HR software market, positioning the company to gain share as competitors struggle with AI-driven transformation.

UiPath: Combining Certainty With Adaptability

Anthropic’s Cowork poses a direct challenge to UiPath, which leads in robotic process automation (RPA). Yet UiPath’s response illustrates why companies grounding strategy in technological reality outperform those chasing pure AI narratives.

The key insight: large language models, while powerful, remain fundamentally probabilistic. They excel at pattern recognition but struggle with determinism. Ask an LLM the same question twice, and you may receive different answers. Worse, LLMs are prone to generating plausible-sounding but fabricated information—a critical flaw when precision matters in enterprise workflows.

RPA, by contrast, operates on rules and determinism. Given identical inputs, RPA always produces identical outputs. Yet RPA can be brittle: if the application or website a robot monitors changes slightly, the entire workflow breaks.

UiPath’s strategy combines the best of both approaches. Merging RPA’s deterministic reliability with agentic AI’s flexibility creates automation that delivers both consistency and adaptability. CEO Daniel Dines stated during the recent earnings call: “Our automation strategy, combining the reliability of deterministic automation with the intelligence and adaptability of agentic AI, continues to align with what customers want most: trusted enterprise-grade automation that delivers tangible ROI fast.”

This framing—grounding the value proposition in tangible ROI and reliability—explains why UiPath customers are expanding usage. The company reported 16% year-over-year revenue growth and a dollar-based net retention rate of 107%, signaling customer confidence and willingness to invest more. At 21 times adjusted earnings estimates, UiPath’s valuation aligns with its growth trajectory.

While AI-only competitors will emerge, UiPath’s platform likely retains advantages in predictability and measurable outcomes—qualities enterprises value above feature parity. As automation markets expand, UiPath appears well-positioned to capture growth that prioritizes reliability over hype.

The Market Opportunity in Rational Analysis

The broader pattern: when markets panic, they often conflate disruption with destruction. Yes, AI will transform software. No, it won’t eliminate the need for software that delivers proven business outcomes.

Paycom sells definable results—fewer payroll errors, streamlined processes. UiPath sells predictable automation that generates measurable ROI. Both companies have grounding strategies in customer value, not in theoretical AI capabilities. That disciplined approach, combined with solid financial metrics and reasonable valuations, makes both stocks worth monitoring while others react to short-term sentiment swings.

As the software industry navigates AI’s evolution, investors who ground decisions in verified performance, not market fear, may discover the most attractive opportunities lie with companies already proving their resilience.