Why AppLovin Stock Was Gaining Today

Key Points

• Meta's revenue grew 22% in the second quarter, reflecting strong ad demand.

• That and Microsoft's strong quarter could bode well for AppLovin, as the high-growth stock is set to report Q2 earnings next week.

• Analysts are expecting earnings per share to double to $2.32.

• 10 stocks we like better than AppLovin ›

Shares of AppLovin (NASDAQ: APP), the fast-growing adtech company, were soaring today even as there was no news out on the company. Instead, the stock seemed to benefit from a wave of bullish sentiment for artificial intelligence (AI) and digital advertising stocks after strong reports from both Meta Platforms and Microsoft last night.

As a result, AppLovin stock was up 8.2% as of 12:53 p.m. ET, while those two big tech stocks gained as well.

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AppLovin rides Meta's coattails

Strong results from Meta in particular seemed to benefit AppLovin, as Meta's report showed off healthy demand in the digital advertising market.

Revenue jumped 22% to $47.5 billion, and advertising made up 98% of its revenue, showing strong demand for ads on Facebook and Instagram.

Meta credited AI improvements for driving both growth in ad impressions and an increase in the price per ad, reflecting increased demand and ROI. That trend, along with Microsoft's strong quarterly numbers, set off a wave of bullishness for stocks like AppLovin, which is high-priced and high-growth and offers exposure to both adtech and AI.

In fact, AppLovin may be ahead of the curve in AI-driven advertising, as its AI-powered recommendation engine, Axon, has been a key source of growth for the company recently.

What's next for AppLovin?

As an expensive, high-growth stock, AppLovin tends to be volatile, and today's gains reflect an improved perception of its future growth ahead of its own earnings report on Aug. 6.

Investors are expecting 13% revenue growth to $1.22 billion in the quarter, though that includes the sale of its mobile apps business. Excluding that, organic growth will be much stronger. On the bottom line, analysts expect earnings per share to essentially double to $2.32, a better reflection of the underlying growth in the business.

The stock has the potential to pop again if it can beat those estimates.

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Jeremy Bowman has positions in AppLovin and Meta Platforms. The Motley Fool has positions in and recommends AppLovin, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.