Should You Buy, Sell, or Hold AppLovin Stock Before Q4 Earnings?

AppLovin Corporation APP will report its fourth-quarter 2025 results on Feb. 11, after the bell.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $2.89, indicating 67% growth from the year-ago reported quarter. The consensus estimate for revenues stands at $1.6 billion, implying 16.9% year-over-year growth, with strong positive expectations from gaming advertising and the MAX platform ecosystem.

One estimate for the fourth quarter was revised downward in the past 60 days, with no upward revision. The Zacks Consensus Estimate has remained unchanged during this time frame.

The company has a strong history of earnings surprises. Earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an earnings surprise of 15.3%, on average.

Q4 Earnings Beat likely for APP

Our proven model does not conclusively predict an earnings beat for APP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

APP has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP’s Price Dynamics and Valuation

The stock has plunged 25% over the past three months compared to the broader industry's10% decline, but the sell-off could not make valuations compelling. Even after the steep correction, ARM continues to trade at a forward 12-month price-to-earnings multiple of 29.71x, above the industry average of 23.64x. It trades at a forward 12-month price-to-sales multiple of 19.74x, way above the industry average of 2.6x, suggesting the stock remains far from inexpensive.

AI-driven performance advertising competitors, Alphabet GOOGL and Meta Platforms META, on the other hand, have shown strength on the bourses lately. Alphabet shares have gained 19% over the past three months, while Meta Platforms has climbed 9%. Both Alphabet and Meta Platforms remain major players, but AppLovin’s specialized platform is delivering superior results in this niche.

Investment Considerations

AppLovin’s structural growth is increasingly driven by its Axon engine, an AI system that automates ad placement, pricing, and optimization at scale. By replacing manual decision-making with real-time machine learning, Axon enables advertisers to deploy campaigns faster, scale budgets confidently, and generate measurable returns. The expansion of APP’s self-serve platform further enhances operating leverage by increasing wallet share and attracting performance-focused advertisers.

Importantly, Axon’s adoption beyond mobile gaming into e-commerce advertising is expanding the company’s addressable market without pressuring margins. This evolution accelerated after the June 2025 divestiture of the Apps segment, marking AppLovin’s shift into a pure AI-driven advertising infrastructure company. Growth is now anchored in platform economics rather than cyclical gaming demand.

A Buy Ahead of Earnings

AppLovin’s investment case is increasingly defined by structural advantages rather than short-term market swings. The company’s Axon-led, AI-driven advertising platform is scaling efficiently, deepening advertiser engagement and expanding beyond gaming into higher-value performance use cases. With a streamlined business model and growing reliance on platform economics, AppLovin is positioned to deliver durable, high-quality growth. The continued traction of the MAX ecosystem further strengthens its competitive moat in performance advertising. Taken together, these factors support a positive view on the stock, and AppLovin appears well-positioned as a buy heading into the upcoming earnings announcement.

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

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