AppLovin's AI Technology Drives Explosive Revenue Growth in 2025

AppLovin APP stands out in 2025 for its explosive revenue and profitability growth, driven mainly by the AI-enhanced advertising technology.

In the second quarter of 2025, AppLovin’s revenues surged 77% year over year to $1.26 billion, while adjusted EBITDA nearly doubled, showcasing an impressive 81% operating margin. Earnings of $2.26 per share beat the Zacks Consensus Estimate of $1.99. Revenues also surpassed the consensus estimate by 3.7%. The company also reported a 72% increase in free cash flow to $768 million, signaling strong cash generation and financial health.

AppLovin’s leadership is aggressively expanding, planning a self-serve referral platform launch in October 2025 and aiming for a full global rollout of its Axon advertising platform in 2026. The company targets 20-30% year-over-year growth rate fueled mainly by its gaming segment and AI-driven ad monetization.

In comparison, two relevant peers, The Trade Desk TTD and Magnite MGNI, operate in adjacent digital advertising spaces and have demonstrated comparable strengths. The Trade Desk, a leader in programmatic advertising, has maintained steady growth with a focus on connected TV and advanced data analytics. Magnite, as a supply-side platform, continues expanding its footprint across multiple device types and formats, emphasizing scale and inventory diversification.

AppLovin’s differentiation lies in combining AI with mobile gaming ad monetization, where it significantly outpaces both The Trade Desk and Magnite in revenue growth rates. However, The Trade Desk’s strong market position and Magnite’s expanding supply-side reach remain significant competitive factors that demand attention from investors examining advertising tech stocks.

We view AppLovin’s growth trajectory as robust and sustainable if it successfully scales the Axon platform and capitalizes on evolving AI ad technologies. The blend of strong profitability, strategic innovation and a clear growth roadmap makes APP a compelling choice in digital advertising alongside The Trade Desk and Magnite as of 2025.

APP’s Price Performance, Valuation and Estimates

The stock has gained 27% year to date compared with the industry’s 14% growth.

From a valuation standpoint, APP trades at a forward price-to-earnings ratio of 34.8, which is well below the industry average of 85.68. It carries a Value Score of F.

The Zacks Consensus Estimate for APP’s earnings has been on the rise over the past 30 days.

APP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research