AppLovin (APP) Rated Buy at Deutsche Bank on Strength of AI-Driven Advertising Platform

AppLovin Corporation (NASDAQ:APP) is one of the AI Stocks Making Waves on Wall Street. On October 22, Deutsche Bank initiated the stock as “Buy” with a $705 price target. The firm stated that the mobile tech company is firing on all cylinders and has built the “best-in-class” advertising technology.

Deutsche Bank analyst Benjamin Black noted that AppLovin is a dominant player within the mobile games’ user acquisition advertising space. It currently boasts an 80% market share on the supply side and more than 55% on the demand side.

According to Black, “other than select walled gardens, no other ad platform can rival its +1bn-strong DAU [Daily Active Users] reach. APP has built best-in-class ad tech that becomes more performant the larger the company’s scale.”

“APP has built best-in-class ad tech that becomes more performant the larger the company’s scale. More throughput (gross ad spend) → more signal for the model → better performance → more ad spend… and so the flywheel continues, creating a deeper and deeper moat. APP’s Axon model is vertical agnostic and performs well across the open web, and AppLovin is now expanding into eCommerce advertising, which is multiple times the size of the mobile game in-app advertising TAM. Moving further down the road, we don’t discount the possibility of the company penetrating other larger categories like financial services, media & entertainment, healthcare, and any transactional service on the web. Our analysis suggests that AppLovin likely can beat Street consensus for 2027 top line (25% CAGR growth over the 2024–2027 period) even with modest 5–10% penetration of the incremental ad spend by eCommerce companies. Traction in eCommerce should increase the diversity of ads which could drive improved ad conversions (to the benefit of take rates) and could attract incremental supply from game publishers that have been reluctant to advertise competing games on their platform.”

AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology.

While we acknowledge the potential of APP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.