1. AppLovin Corporation (NASDAQ:APP)
Average Upside Potential: ~89.4%
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) is engaged in building a software-based platform for advertisers to enhance the marketing and monetization of their content. Jefferies reiterated a “Buy” rating on the company’s stock with the price objective of $600. The firm remains bullish on the long-term opportunity and the near-term steps it is taking to build a multibillion-dollar e-commerce ad business. Elsewhere, analyst Jason Bazinet of Citi maintained a “Buy” rating on AppLovin Corporation (NASDAQ:APP)’s stock, retaining the price target of $600.00. The analyst’s rating is backed by a combination of factors demonstrating the company’s growth potential and resilience in the market. One critical reason is the company’s strong response to bearish reports, highlighting that their tools remain effective, as evidenced by the continued client usage despite overlaps with several other platforms such as Meta.
This showcases the confidence in AppLovin Corporation (NASDAQ:APP)’s ability to offer incremental sales for its clients. Another critical factor is the healthy growth in the company’s eCommerce sector. AppLovin Corporation (NASDAQ:APP) continues to explore several avenues for expansion, which include international growth and developing a robust AdTech solution for eCommerce. ClearBridge Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“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 APP as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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