AppLovin Stock Jumps 50% in 3 Months: Is it Too Late to Buy?
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With digital ad giants regaining momentum, market sentiment appears to be turning favorable for ad tech firms. This article evaluates whether AppLovin remains a compelling buy amid this uptrend.
APP: Dominating Mobile Ads With Axon 2
AppLovin has solidified its leadership in mobile advertising, powered by its next-gen AI engine, Axon 2, which launched in the second quarter of 2023. Since its debut, Axon 2 has radically enhanced AppLovin's ad performance, helping to quadruple advertising spend on its platform.
This explosive growth has led to an estimated $10 billion annual run rate in ad spend from gaming clients, pushing AppLovin into the upper echelon of global ad tech firms by valuation.
Axon 2's importance goes far beyond mere optimization. In a post-Identifier for Advertisers environment that disrupted mobile user acquisition strategies, Axon 2 served as a critical catalyst for recovery. While Western mobile gaming experienced stagnation in 2022, Axon 2 reignited ad-driven momentum. Though in-app purchases are seeing modest, mid-single-digit growth, AppLovin's MAX publisher base is expanding at a significantly faster rate, underscoring Axon 2's strategic advantage.
Google, Microsoft MSFT and Salesforce CRM are rapidly advancing generative AI. Microsoft integrates AI in Office via Copilot and expands Azure's AI. Google embeds AI in Workspace and enhances Vertex AI. Salesforce incorporates AI across its CRM, especially through Einstein Copilot and Data Cloud. Microsoft is also focusing on AI governance, while Google is strengthening AI security. Salesforce further refines dynamic customer experiences.
While these giants focus on enterprise productivity and CRM, Applovintakes a different route, using AI to drive direct monetization in mobile advertising.
APP's Financial Results Speak Volumes
AppLovin's financial performance has matched its technological breakthroughs. In the first quarter of 2025, revenues surged 40% year over year, reflecting strong market demand. Adjusted EBITDA jumped 83% year over year, showcasing improved operational efficiency. Net income skyrocketed 144% from the prior year, demonstrating APP's ability to translate revenue growth into significant profitability. For the full year 2024, revenues climbed 43% year over year, while adjusted EBITDA surged 81%, underscoring AppLovin's ability to seize market opportunities while maintaining efficiency.
APP: Analyst Estimates Signal Further Upside
Analyst expectations reflect continued optimism. The Zacks Consensus Estimate for second-quarter 2025 earnings is $2.01 per share, up 125.8% from the year-ago period. Revenue for the same quarter is expected to reach $1.45 billion, indicating 33.9% year-over-year growth. Looking further ahead, full-year 2025 earnings are projected to grow by 85.7%, with 2026 earnings expected to rise another 42.2%. Revenues are also expected to increase by 21.5% in 2025 and 19.2% in 2026. These projections underscore confidence in the company's monetization engine and its ability to deliver strong earnings amid digital ad market expansion.
Bottom Line: APP Still a Buy
AppLovin's recent rally is not merely hype; it is rooted in tangible performance, cutting-edge technology, and an expanding advertiser base. The success of Axon 2, coupled with soaring financial metrics and bullish analyst forecasts, supports a bullish outlook. While broader tech firms are steering AI toward enterprise productivity, AppLovin is capitalizing on AI's power to drive direct, scalable monetization in mobile advertising, a strategy that is paying off. AppLovin remains a strong buy for investors seeking exposure to high-growth AI-powered tech with proven execution.
APP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
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