Bull of the Day: AppLovin (APP)

AppLovin (APP) is a name I’ve been following since it was just a fraction of its current size, and it has only grown more compelling as an investment opportunity. The company has carved out a dominant position in the mobile app ecosystem, operating an exceptionally profitable business model in one of the most advantaged verticals in the market: mobile advertising and app monetization.

What sets AppLovin apart is its combination of cutting-edge AI-driven ad technology, growing network effects, and a proven track record of scaling revenue and profitability at an impressive pace. It also currently holds a Zacks Rank #1 (Strong Buy) rating, reflecting a wave of positive earnings estimate revisions. Technically, the stock is showing strong momentum as well, having just broken out of a long consolidation, indicating the next bull run may have just begun.

AppLovin Stock Rallies on Increased Operating Leverage

AppLovin is also actively enhancing its already strong business economics. The company has been making a concerted push to integrate artificial intelligence deeper into its workflows, driving meaningful gains in productivity, efficiency, and operating margins. This increased operating leverage means more revenue is flowing directly to the bottom line, amplifying earnings growth.

At the helm is a founder-CEO with a reputation for laser focus and disciplined execution. Under his leadership, AppLovin executed impressively, not deviating from the company’s core plan or allowing for bloat to accumulate.

In addition, the company’s e-commerce advertising business is still in the early stages of scaling, representing a potentially powerful new revenue stream. As this segment ramps, it should diversify AppLovin’s business mix and further accelerate growth.

Shares of APP Get Upgraded

After cooling off for just a short period, earnings estimates are again being lifted. Current quarter estimates have risen by 6.4% in the last week, next quarter by 9.35% and next year’s estimates by nearly 13%.

Earnings are projected to climb nearly 100% this year and 51% next year, while the company is trading at a relatively high but not egregious 34.6x next year’s earnings.

After only a brief pause in momentum, Wall Street analysts are once again raising their expectations for AppLovin. In just the past week, current-quarter earnings estimates have climbed 6.4%, next quarter’s have jumped 9.35%, and next year’s have surged nearly 13%. This renewed wave of upward revisions underscores growing confidence in the company’s execution and outlook.

The growth forecasts are impressive by any standard. Earnings are projected to nearly double in 2025, followed by an additional 51% jump in 2026. While APP trades at a forward earnings multiple of 34.6x next year’s earnings, which is high, but not egregious, the valuation looks far more reasonable when discounting those very high growth forecasts.

Technical Setup in AppLovin Stock

From early 2024 to February 2025, AppLovin delivered one of the most extraordinary runs in the market, climbing more than 1,000% in just over a year. That parabolic rally eventually gave way to a sharp correction this spring, followed by several months of choppy action.

This consolidation phase helped reset investor expectations and allowed the stock to digest its massive gains. In technical terms, this created a large and well-defined bull flag pattern.

Now, the breakout has arrived. Shares have pushed above the upper boundary of the flag with conviction, supported by rising volume and improving fundamentals. With little overhead resistance until all-time highs, the technical picture suggests the potential for a sustained move higher and likely run into uncharted territory.

Should Investors Buy Shares in APP?

AppLovin checks all the boxes, with exceptional fundamentals, accelerating earnings estimates, expanding market opportunities, and a technical setup pointing to another leg higher. With AI integration driving efficiency, a sharp leadership team and new revenue streams beginning to scale, the company’s growth story has legs. For investors seeking exposure to one of the most innovative and profitable players in the market, AppLovin remains a compelling buy.

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This article originally published on Zacks Investment Research (zacks.com).

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