Axon 2 Drives AppLovin's Advertising Surge and Gaming Ecosystem

AppLovin Corporation APP has emerged as a dominant force in the mobile advertising ecosystem, thanks to the strong performance of its AI engine, Axon 2.

Launched in the second quarter of 2023, Axon 2 has significantly transformed the company’s ad platform. Since its rollout, advertising spend on AppLovin’s platform has quadrupled, with ad spend for gaming clients reaching an estimated $10 billion annual run rate, a scale that now places AppLovin among the most highly valued ad tech firms globally.

Axon 2’s impact extends beyond the platform. In a post-Identifier for Advertisers environment that challenged mobile user acquisition, it became a key catalyst for recovery. While Western mobile gaming growth stalled in 2022, Axon 2 helped reignite the market. While in-app purchase revenues are seeing mid-single-digit annual growth, the company’s MAX publishers are expanding at multiples of that rate.

The financial results speak volumes. In the first quarter of 2025, revenue rose 40% year over year, adjusted EBITDA surged 83%, and net income grew 144%. Full-year 2024 figures were equally strong, with revenue up 43% and EBITDA up 81%.

By directly addressing mobile advertising's toughest challenges, Axon 2 hasn’t just improved performance; it has reshaped the economics of mobile game discovery and monetization.

How Other Tech Giants Are Using AI

Alphabet’s GOOGL Google, Microsoft MSFT, and Salesforce CRM are rapidly advancing generative AI. Microsoft integrates AI in Office via Copilot and expands Azure’s AI. Google embeds AI in Workspace and enhances Vertex AI. Salesforce incorporates AI across its CRM, especially through Einstein Copilot and Data Cloud. Microsoft is also focusing on AI governance, while Google is strengthening AI security. Salesforce further refines dynamic customer experiences.

While these giants focus on enterprise productivity and CRM, Applovintakes a different route, using AI to drive direct monetization in mobile advertising.

APP’s Price Performance, Valuation, and Estimates

The stock has surged 23% year to date, significantly outperforming the industry’s 5% rally.

From a valuation standpoint, APP trades at a forward price-to-earnings ratio of 40.31, well above the industry’s 24.17. 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 stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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