1. AppLovin Corporation (NASDAQ:APP)
TTM Net Profit Margin: 33.55%
Number of Hedge Fund Holders: 95
Analyst Upside Potential: 76.73%
AppLovin Corporation (NASDAQ:APP) is a technology company that offers AI-powered advertising solutions and software platforms to help businesses reach, monetize, and grow their global audiences. On March 13, Analyst Jason Bazinet from Citi maintained a Buy rating on the stock with a price target of $600.
The analyst noted that despite competitive overlaps with platforms like Meta, AppLovin Corporation’s (NASDAQ:APP) tools have continued to be effective, as evidenced by sustained client usage. This demonstrates the company’s ability to generate incremental sales for its clients. Moreover, the company has onboarded approximately 600 eCommerce customers, with 80% scaling their spending. It is also actively pursuing international expansion and enhancing its AdTech solutions for eCommerce, which is expected to catch up with its established mobile gaming ad model.
During the fiscal fourth quarter of 2024, the company grew its advertising revenue by 73%, which resulted in total revenue growing by 44% year-over-year. Moreover, the company has been able to maintain net profit margins of more than 33% thereby making it the best extremely profitable stock to buy according to analysts.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q4 2024 investor letter:
“Stock selection in IT was the greatest contributor to performance on strength in AppLovin Corporation (NASDAQ:APP) and Marvell. AppLovin is the world’s leading mobile game and app advertising platform, providing software for marketing and monetization, powered by its proprietary AI targeting engine Axon. We see opportunity for AppLovin to continue to expand and grow its share of the market for mobile app marketing at a time when mobile gaming ad spend is recovering from a higher-rate-driven trough. We also see the potential for the company to expand its addressable market to include e-commerce advertising, around which initial forays have been encouraging. With strong incremental margins and management keeping expenses controlled, the company should be able to drive significant free cash flow growth as revenue continues to scale.”
While we acknowledge the potential of AppLovin Corporation (NASDAQ:APP) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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