12 Best Up and Coming Stocks to Buy According to Wall Street Analysts

5. Applovin Corp. (NASDAQ:APP)

Average Upside Potential as of March 21: 80.93%

Number of Hedge Fund Holders: 95

Applovin Corp. (NASDAQ:APP) develops a software platform that enhances marketing and monetization for advertisers across mobile and connected TV. It operates through advertising and app segments and provides tools like AppDiscovery, MAX, Adjust, and Wurl, along with mobile games. It serves individual users, small businesses, enterprises, and app developers.

In Q4 2024, the company’s AI-driven advertising segment achieved $999 million in revenue and $777 million in adjusted EBITDA, which resulted in a 78% margin. This success was attributed to the platform’s effectiveness in attracting e-commerce advertisers during the holiday season. To further capitalize on this growth, the company is prioritizing the development of automated tools for self-service advertising. It’s also divesting its Apps (gaming studio) business for an estimated $900 million to focus on its high-margin advertising platform.

For Q1 2025, the company projects the Advertising business to generate revenue between $1.030 and $1.050 billion. On March 20, Citi analyst Jason Bazinet reiterated a Buy rating and $600 price target for the company due to its AI-powered marketing platform. The company’s game studio sale in H2 2025 is expected to boost revenue by $75 million annually, as new owners will likely use Applovin Corp.’s (NASDAQ:APP) Ads platform, which will match Q4 2024 eCommerce revenue.

The company’s leading position in mobile app advertising, which is driven by its AI engine and potential expansion into e-commerce, contributed to the ClearBridge Mid Cap Strategy’s strong IT performance. It stated the following regarding Applovin Corp. (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.”