In this week’s U.S. stock market, AppLovin emerged as a standout, capturing global investor attention with its impressive share price surge and substantial market capitalization gains. The California-based mobile technology firm saw its stock price soar by 46% on Thursday, November 7, briefly propelling its total market value past $100 billion. Consequently, AppLovin has become one of the top-performing tech stocks in the U.S. capital markets this year.

The Power of AI Technology

AppLovin’s cumulative year-to-date growth has reached nearly 650%, significantly outpacing NVIDIA's 206% gain over the same period. This remarkable growth is underpinned by two main drivers: robust performance metrics and advancements in AI technology. Specifically, the company’s AI advertising engine, AXON 2.0, has been a major force behind the stock’s exceptional performance. Notably, in the third quarter, AppLovin’s earnings surpassed analyst expectations across the board, underscoring its strong competitive position in the mobile advertising and gaming sectors.

To keep pace with industry trends, AppLovin introduced the AI-driven ad engine AXON 2.0, which supports the development of its intelligent advertising software solution, eDiscovery. This system enables large-scale ad auctions with microsecond-level efficiency, aligning supply and demand in real time. Importantly, AXON not only identifies users who are likely to download client applications but also profiles those likely to engage deeply with them, thus generating increased value for advertisers. According to AppLovin’s data, the installation rate for eDiscovery, which grew by only 17% last year, now averages an 82% growth rate (87% in Q1 and 77% in Q2). Consequently, by the first half of 2024, AppLovin’s software business accounted for nearly two-thirds of the group’s total revenue, with its profit margin expanding more than fourfold to an impressive 78%.

Financial Performance

As one of the world’s leading mobile marketing platforms, AppLovin holds considerable renown and influence in mobile advertising and gaming, having climbed to the top of AppsFlyer’s ad platform rankings in 2023.

Furthermore, the company’s financials are equally remarkable. The third-quarter earnings report, released on November 7, 2024, disclosed quarterly revenue of $1.2 billion, marking a 39% year-over-year increase, with profits reaching $434 million—a 300% year-over-year rise. Additionally, adjusted EBITDA reflected a profit margin of 60%. Revenue from the software platform grew to $835 million, a 66% year-over-year increase, with an adjusted profit margin of 78%, exceeding Wall Street expectations.

Market Expectations

Following AppLovin’s recent stock price highs, Wall Street analysts project continued growth for the company. All 13 analysts tracking the stock have raised their earnings-per-share forecasts, reflecting Wall Street’s strong confidence in AppLovin’s performance.

For instance, Martin Yang from Oppenheimer Holdings observed that investors may still be underestimating the pace at which AXON 2.0 can boost company performance, expand profit margins, and sustain operational leverage. In a report to investors on Thursday, Michael Pachter from Wedbush Securities remarked, “AppLovin’s performance remains impressive,” reiterating his outperform rating on the stock and indicating that, at current levels, downside risk is minimal.

In conclusion, AppLovin’s extraordinary stock surge is attributable to its achievements in AI technology, financial performance, and market positioning. From its vast and high-quality traffic base to the ad-delivery enhancements enabled by AI algorithms, AppLovin continues to refine solutions in the non-gaming sector, positioning itself to stand out globally and lead innovation and development within the mobile advertising and gaming industries.