In this article, we will discuss the 12 Stocks to Buy with Exponential Growth in 2025.
With the Trump administration implementing the tariff agenda, global markets continue to feel the impact, with sell-offs taking place as investors are on their toes due to the implications of a dynamic trade landscape. Morgan Stanley believes that stocks in sectors having increased foreign revenue exposure, including technology, materials and energy, can be more vulnerable to tariff uncertainties. If tariffs remain long-lasting, there is a possibility that defensive stocks in sectors like health care and utilities might outperform cyclicals, including consumer discretionary companies.
Resilient Sectors Amidst Uncertainties
The technology, energy, materials and industrials sectors, having foreign revenue exposure as high as 57%, are especially exposed to tariffs, says Morgan Stanley. For instance, the tariffs targeting aluminum and steel can impact the materials sector, while tariffs specific to China or retaliation efforts can have secondary impacts for broader technology space. If the tariff regime escalates, the firm opines that the utilities and healthcare sectors are expected to outperform because of their defensive nature and lower tariff exposure.
If the long-lasting tariff regime comes into action, the defensive US stocks can outperform cyclical sectors such as industrials or consumer discretionary. This is because cyclical sectors are more vulnerable to higher import costs as well as a reduction in international trade. Furthermore, the consumer discretionary companies that have higher reliance on revenues garnered from lower-income consumers can witness the most pressure.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Amidst Tariffs, What Lies Ahead for US Economy?
The strong consumer spending has been driving the economy, and Dr. David Kelly (Chief Global Strategist at J.P. Morgan Asset Management) anticipates another year of 2% GDP growth. One critical impact of Trump’s immigration policies can be less job growth. Another important focus of the Trump administration revolves around deregulation, which is expected to have positive impacts on investing. Kelly believes that deregulation or lack of additional regulation is expected to help some areas, mainly for financial markets.
There could be an increase in bank lending and private credit. Kelly believes that private equity markets and cryptocurrencies are expected to gain the most from deregulation. The outlook on corporate profitability this year remains significantly good. Kelly opines that there has been a broadening out of profits. Earlier, there were technology companies and the Mag Seven and the like who were making money. Now, in Q4 2024, 9 out of 11 S&P 500 sectors witnessed a gain.
Amidst these trends, we will now have a look at the 12 Stocks to Buy with Exponential Growth in 2025.
A financial analyst at his computer monitor, tracking the public company’s investments.
Our Methodology
To list the 12 Stocks to Buy with Exponential Growth in 2025, we used a screener to shortlist the companies that analysts see significant upside to. The stocks were ranked in ascending order of their average upside potential, as of March 14. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Stocks to Buy with Exponential Growth in 2025
12. Carvana Co. (NYSE:CVNA)
Average Upside Potential: ~54.5%
Number of Hedge Fund Holders: 84
Carvana Co. (NYSE:CVNA) operates an e-commerce platform for purchasing and selling used cars. Analyst Chris Pierce of Needham reiterated a “Buy” rating on the company’s stock, while maintaining the price objective of $340.00. The analyst’s rating is backed by a combination of factors demonstrating the company’s strong growth potential and strategic advantages. Carvana Co. (NYSE:CVNA)’s innovative approach, which focuses on combining a digital storefront with physical inspection and reconditioning centers, places it favourably well in a fragmented and technologically underdeveloped industry, says the analyst.
Because of this unique model, the company can achieve strong efficiency gains and cost advantages as compared to its competitors operating at a lower scale. Also, the analyst’s price objective implies confidence in Carvana Co. (NYSE:CVNA)’s ability to maintain its growth trajectory. With the company leveraging its underutilized physical assets, it remains well-placed to capture additional market share, which further strengthens the rating. Elsewhere, Bank of America Securities maintained a “Buy” rating on Carvana Co. (NYSE:CVNA)’s stock with the price objective of $270.00.
Recurve Capital, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“One year is too short a time frame to evaluate anything and we will never be perfect, but overall, nailing Carvana Co. (NYSE:CVNA) mattered much more than anything else.
We assess our portfolio management performance by looking at the breadth of participation across the portfolio and by comparing our actual results to two parallel scenarios: (1) our performance relative to an equal-weight portfolio of the same positions, and (2) our performance relative to the actual portfolio assuming no further trading over the evaluation period. Encouragingly, our actual performance has been better than both alternate scenarios across substantially all evaluation periods. The primary exception is at the end of 2022, when an equal-weight portfolio would have produced better forward returns by having significantly more exposure to Carvana at its record-low prices. These analyses give me comfort that we add value through our active management and optimization of the portfolio.
We care most about portfolio-level returns which largely depend on slugging percentages, but we also know that having a consistent batting average is important. As shown in the chart below, the median position in our portfolio returned +35% in 2024 on a total return basis (including dividends), below our actual performance but nicely above the returns for the major indices. Carvana’s excellent performance in 2024 pulled our actual performance well above the median, but that was our intention given our large position size. We had healthy contributions across the portfolio, but we also benefited from great slugging percentages in 2023 and 2024…” (Click here to read the full text)
11. Constellation Energy Corporation (NASDAQ:CEG)
Average Upside Potential: ~55.6%
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) is engaged in producing and selling energy products and services. The company’s strategic focus on carbon-free generation, mainly its healthy position in nuclear energy, places it well for future growth. With global efforts focused on combating climate change, the demand for clean energy sources is projected to surge. Constellation Energy Corporation (NASDAQ:CEG)’s extensive portfolio of nuclear as well as renewable assets enables it to cater to this increased demand effectively.
One critical driver is the rapidly growing AI sector, which offers significant opportunities for the company’s expansion. This is because AI and data centers need significant amounts of reliable power, aligning perfectly with Constellation Energy Corporation (NASDAQ:CEG)’s capabilities, mainly its nuclear power generation. The company’s expertise in offering reliable, carbon-free energy places it as an attractive partner for leading technology giants and other AI-driven industries, which can result in lucrative deals and partnerships moving forward.
Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Constellation Energy Corporation (NASDAQ:CEG) is the largest producer of clean energy in the U.S., with 32,400 Megawatts of capacity, approximately 67% of which is nuclear generated. Its nuclear, hydro, wind, and solar facilities provide 10% of all clean energy on the U.S. grid and 22% of its clean baseload power. We believe the company stands to benefit from the increasing electrification of the U.S. economy. The rise of electric vehicles, data centers, and reshoring of American manufacturing is driving U.S. electricity load growth for the first time in nearly two decades. During the quarter, shares detracted from performance due to a combination of regulatory challenges and broader industry pressures. The Federal Energy Regulatory Commission (FERC) rejected an interconnection agreement between Talen Energy’s Susquehanna nuclear plant and an Amazon data center, raising concerns about similar deals and regulatory hurdles for the nuclear industry. While this event was outside Constellation’s control, we believe it does not alter the thesis that tight power markets should drive higher pricing for the company. In our view, the FERC rejection also underscores anticipated tightness in mid-Atlantic power markets, reinforcing the long-term value of Constellation’s under-monetized assets.”
10. Datadog, Inc. (NASDAQ:DDOG)
Average Upside Potential: ~57.1%
Number of Hedge Fund Holders: 83
Datadog, Inc. (NASDAQ:DDOG) operates an observability and security platform for cloud applications. Analyst Mike Cikos from Needham maintained a “Buy” rating on the company’s stock, setting a price objective of $160.00. The analyst’s rating is backed by a combination of factors reflecting the company’s healthy business momentum. As per the analyst, the company continues to experience strong growth, thanks to the industry M&As and a strong focus from customers on optimizing operations. Furthermore, Datadog, Inc. (NASDAQ:DDOG)’s introduction of new offerings, like LLM Observability, has been improving its market presence, with investments in security solutions placing it well to capitalize on the current industry trends.
Datadog, Inc. (NASDAQ:DDOG) remains well-placed to benefit from the strong growth in AI and cloud adoption. Its platform is being used to monitor AI workloads, and the product innovations continue to focus on enhancing observability for LLMs as well as other AI applications. With companies integrating AI into their operations, demand for sophisticated monitoring and observability tools can improve, providing a strong opportunity for Datadog, Inc. (NASDAQ:DDOG).
Brown Capital Management, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Other examples of negative sentiment include portfolio companies that reported earnings that met or exceeded expectations, but only saw their share prices go up slightly, stay flat or even decline. For example, Datadog, Inc. (NASDAQ:DDOG) is a leading SaaS-based, information technology (IT)-monitoring and analytics software platform for developers, IT operations and business users. The platform automates the monitoring of infrastructure, applications databases, networks, logs and security. Datadog’s platform is differentiated by providing a unified view of these systems via a visual interface configured to the needs of each user (i.e., a single pane of glass). Datadog delivered solid operating results in the second quarter of 2024, reporting revenue growth of 27% and raising 2024 full year revenue, operating income and earnings guidance. Despite these solid fundamental results, Datadog’s share price was down 11.8% in the third quarter. We speculate that these market reactions are evidence of the negative environment for high-growth companies. For more, please see the Detractors section below.
Datadog, mentioned above, automates the monitoring of infrastructure, applications databases, networks, logs and security. The company delivered solid operating results in the second quarter of 2024, reporting revenue growth of 27% and raising guidance for 2024 full-year revenue, operating income and earnings. Datadog noted improving consumption and demand trends among its enterprise customers and stabilizing trends among its small and mid-sized customers. On its earnings call, Datadog management disputed that it has interest in large acquisitions, notwithstanding news articles on July 17 that Gitlab was seeking a buyer and Datadog is among the potential suitors. Despite solid fundamental results, Datadog’s share price underperformed in the third quarter of 2024. This may be due to its premium valuation and investor worries about Datadog’s ability to sustain its current strong revenue growth in a softer economic environment. We remain confident in Datadog’s ability to deliver durable growth over the long term. We believe Datadog has a massive and underpenetrated total addressable market that is growing about 10% annually. We also believe Datadog has a strong competitive positioning in infrastructure monitoring and is gaining market share.”
9. DraftKings Inc. (NASDAQ:DKNG)
Average Upside Potential: ~58.4%
Number of Hedge Fund Holders: 65
DraftKings Inc. (NASDAQ:DKNG) operates as a digital sports entertainment and gaming company. Northland upped the price objective on the company’s stock to $60 from $50, keeping an “Outperform” rating after it delivered results which surpassed the firm’s estimates. DraftKings Inc. (NASDAQ:DKNG) continues to achieve strong conversion into its parlay offerings, aiding a higher than anticipated structural hold rate, which is being reflected in a healthy start to 2025, says the analyst. In Q4 2024, the company saw revenues of $1,393 million, reflecting an increase of 13% as compared to $1,231 million in the same period in 2023.
Overall, in FY 2024, DraftKings Inc. (NASDAQ:DKNG) remains focused on efficiently acquiring and engaging customers, expanding the structural sportsbook hold percentage as well as optimizing the promotional reinvestment. Elsewhere, Needham upped the company’s price target to $65 from $60, keeping a “Buy” rating. The firm remains incrementally more bullish on DraftKings Inc. (NASDAQ:DKNG) achieving the targets as online sports betting handle trends continue to accelerate in Q1 and with sports outcomes viewed as favourable quarter-to-date. Notably, the company raised the midpoint of its FY 2025 revenue guidance, and now anticipates revenue of $6.3 billion – $6.6 billion as compared to the previous guidance of $6.2 billion – $6.6 billion.
8. Vertiv Holdings Co (NYSE:VRT)
Average Upside Potential: ~60%
Number of Hedge Fund Holders: 92
Vertiv Holdings Co (NYSE:VRT) is engaged in designing, manufacturing, and servicing critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Analyst Andrew Obin from Bank of America Securities reiterated a “Buy” rating on the company’s stock with the price objective of $165.00. The rating stems from factors highlighting the promising long-term demand outlook for Vertiv Holdings Co (NYSE:VRT). Despite the short-term challenges, the company’s growth in the Americas is a strong point, says the analyst. Furthermore, the expectation of a pickup in orders during 2025, due to the strong pipeline, also contributes to the favourable outlook.
Despite the volatility, the resilience in hyperscale capital expenditure plans hints at continued investment in Vertiv Holdings Co (NYSE:VRT)’s sector, supporting the positive recommendation. Elsewhere, Christopher Snyder from Morgan Stanley maintained a “Buy” rating on the company’s stock, with a price objective of $140.00. Vertiv Holdings Co (NYSE:VRT)’s strong 2024 results demonstrate the company’s intense industry focus, innovative technologies and robust portfolio.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Vertiv Holdings Co (NYSE:VRT), a critical digital infrastructure solutions provider for data centers, continued to perform well. With a leading market share in power and cooling applications for data centers, Vertiv is seen as a prime beneficiary of the AI-related data center buildout. At its November Analyst Day, Vertiv raised organic sales guidance to 12% to 14% CAGR for the next five years and gave guidance of 16% to 18% organic revenue growth for 2025. Vertiv also increased its target adjusted operating profit margin from 20% to 25%. While impressive on their own, these forecasts can prove conservative we think. With the stock up 141% in 2024, we have been trimming the stock into strength to manage position size but hold a large stake as we believe in its growth and that the stock is reasonably valued even after great appreciation the last two years.”
7. Atlassian Corporation (NASDAQ:TEAM)
Average Upside Potential: ~62.5%
Number of Hedge Fund Holders: 75
Atlassian Corporation (NASDAQ:TEAM) is engaged in designing, developing, licensing, and maintaining various software products. The company’s investments in AI, mainly via its Atlassian Intelligence and Rovo offerings, provide strong growth opportunities. These AI-powered solutions can enhance user productivity, streamline workflows, and offer valuable insights throughout Atlassian Corporation (NASDAQ:TEAM)’s product portfolio. The roll-out of Rovo, which is an AI-powered enterprise search platform, can establish a new revenue stream for the company.
The integration of AI capabilities throughout Atlassian Corporation (NASDAQ:TEAM)’s product suite can improve its value proposition to customers, potentially fueling increased adoption rates, higher user engagement, and improved customer retention. With AI continuing to play a critical part in software development and collaboration tools, Atlassian Corporation (NASDAQ:TEAM)’s early investments in this area can place it well as a leader in AI-powered productivity solutions. The company and Amazon Web Services (AWS) announced a multi-year strategic collaboration agreement, which focuses on further providing Atlassian customers access to the latest cloud-enabled services, which include GenAI, backed by security, privacy, compliance, and reliability.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Among our top Q4 contributors were Atlassian Corporation (NASDAQ:TEAM), Spotify and Marvell Technology. Atlassian provides collaboration and productivity software tools—a large, structurally growing addressable market that is expanding from the core software developer market to a much larger “knowledge worker” market. Along with much of the software industry, the company went through a period of weakness as small and medium-sized businesses pulled back spending due to macroeconomic concerns, and enterprise IT spending shifted toward AI projects at the expense of traditional cloud software offerings. However, shares rallied after earnings results beat expectations and showed signs of a turnaround, including higher-than-expected paid seat expansion.”
6. Block, Inc. (NYSE:XYZ)
Average Upside Potential: ~66.0%
Number of Hedge Fund Holders: 81
Block, Inc. (NYSE:XYZ) is engaged in building ecosystems focused on commerce and financial products and services. BMO Capital upped the company’s stock to “Outperform” from “Market Perform” with a price objective of $89. The firm sees an attractive entry point after the recent sell-off. Notably, Block, Inc. (NYSE:XYZ)’s stock has seen a decline of ~32% over the past month. As per the analyst, the Street estimates have lower downside risk, while investor sentiment and positioning remain more balanced. The firm expects potential for sentiment to witness improvement through 2025 as Cash App accelerates profit growth.
Elsewhere, BTIG analyst Andrew Harte kept a “Buy” rating on the company’s stock with the price objective of $110. Block, Inc. (NYSE:XYZ) announced that its industrial bank, Square Financial Services, Inc., got approval from the FDIC to begin offering the consumer loan product Cash App Borrow. As per the analyst, Block, Inc. (NYSE:XYZ) is expected to improve its gross profit over the upcoming 2 years while expanding its operating margins as it has been deepening relationships with Cash App users and Square merchants. At the time of Q4 2024 results, Block, Inc. (NYSE:XYZ) highlighted that it scaled Cash App Borrow to ~$9 billion in originations over the past year, implying robust customer demand for easy-to-repay small loans.
5. Marvell Technology, Inc. (NASDAQ:MRVL)
Average Upside Potential: ~67.3%
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) offers data infrastructure semiconductor solutions, spanning across data center core to network edge. Data center and AI sales are the company’s primary drivers, and they continue to become the dominant piece of its business, says Morningstar. As per the firm, Marvell Technology, Inc. (NASDAQ:MRVL) remains well-placed to capture market share and witness rapid long-term growth throughout both custom AI accelerators and data center optical networking. Morningstar’s long-term thesis for robust growth and organic share gains in custom accelerators and AI networking infrastructure remains intact. The firm has a fair value estimate of $90 per share for the company’s stock.
Morningstar also expects a 24% sales growth for Marvell Technology, Inc. (NASDAQ:MRVL) over the upcoming 5 years, mainly from organic share gains as it flexes its portfolio for higher applications in data centers as well as AI. While it expects that the company will take organic share throughout most of its end markets, its largest win rate is expected to come in the data center. Overall, Marvell Technology, Inc. (NASDAQ:MRVL)’s broader portfolio of switches, processors, and optical chips provides it with significant opportunities for cross-selling and share gains.
Columbia Threadneedle Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“The portfolio’s holdings in semiconductor and semiconductor equipment companies such as Broadcom and Marvell Technology, Inc. (NASDAQ:MRVL) contributed to performance relative to the fund’s benchmark. Broadcom and Marvell were two overweight positions for the portfolio compared to the benchmark and both company’s stock prices moved higher during the fourth quarter. Marvell Technology is a semiconductor chip manufacturer that primarily focuses on developing and producing technology for data infrastructure. During the fourth quarter, Marvell announced an expansion of its existing relationship with Amazon Web Services (AWS), which includes collaboration across multiple AWS products and the use of AWS’ cloud infrastructure.”
4. Delta Air Lines, Inc. (NYSE:DAL)
Average Upside Potential: ~71.1%
Number of Hedge Fund Holders: 84
Delta Air Lines, Inc. (NYSE:DAL) offers scheduled air transportation for passengers and cargo. Raymond James analyst Savanthi Syth has maintained the bullish stance on the company’s stock, offering a “Buy” rating. The analyst’s rating is backed by a combination of factors highlighting the company’s strategic positioning and future prospects. It continues to show signs of recovery. As per the analyst, Delta Air Lines, Inc. (NYSE:DAL) adjusted its revenue management strategy, resulting in improved booking trends, which can bolster its performance. Furthermore, the company has reiterated the 2025 earnings guidance, thanks to favorable peak season demand indicators as well as a fall in fuel prices, which can favourably affect the full-year outlook.
Notably, Delta Air Lines, Inc. (NYSE:DAL) expects 2025 earnings of greater than $7.35 per share and FCF of greater than $4 billion. Despite the challenges, Syth believes that the overall sentiment remains optimistic, with the company’s strategic adjustments and market conditions hinting at potential growth. Elsewhere, analyst Sheila Kahyaoglu from Jefferies maintained a “Buy” rating on Delta Air Lines, Inc. (NYSE:DAL)’s stock, maintaining the price objective of $85.00. As per this analyst, the company’s strong industry position is further aided by the disciplined operational and cost management, together with healthy performance in premium, loyalty, and international revenue streams.
3. Robinhood Markets, Inc. (NASDAQ:HOOD)
Average Upside Potential: ~78.3%
Number of Hedge Fund Holders: 79
Robinhood Markets, Inc. (NASDAQ:HOOD) operates a financial services platform in the US. Deutsche Bank analyst Brian Bedell believes that the company is a good buying opportunity, and has maintained a “Buy” rating on the stock. Robinhood Markets, Inc. (NASDAQ:HOOD) continues to demonstrate encouraging growth and resilience, mainly in its trading volumes and new product offerings. As per the analyst, the company has been witnessing robust trading momentum, mainly in equities and options. The crypto notional volumes rose over 400% YoY, touching $71 billion in Q4 2024. The company’s newer products, which include futures trading, have been picking up steam faster than anticipated.
Elsewhere, BofA Securities remains optimistic about Robinhood Markets, Inc. (NASDAQ:HOOD)’s stock, maintaining a “Buy” rating and a price objective of $65.00. The firm’s analyst noted the platform’s higher retail engagement and strong organic growth. The company possesses strong growth potential in the self-directed retail as well as cryptocurrency sectors globally. Furthermore, an expanded cryptocurrency offering is expected, enhancing Robinhood Markets, Inc. (NASDAQ:HOOD)’s appeal to crypto traders and investors.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“During the quarter, we initiated new GardenSM positions in US Foods, Pure Storage and Robinhood Markets, Inc. (NASDAQ:HOOD). Robinhood has emerged as the go-to-trading platform for millennials, boasting approximately 25 million accounts (versus Charles Schwab’s 34 million). The company’s user base skews younger, with deposits growing significantly faster than the broader industry due to several drivers, including the rise of self-directed trading, the generational wealth transfer to millennials and increasing market share. As Robinhood’s customer base matures and accumulates wealth, we believe the company is well positioned to expand its product offerings to meet evolving financial needs. Furthermore, management’s focus on profitable growth and a 90% fixed cost structure suggests meaningful margin expansion potential.”
2. Coinbase Global, Inc. (NASDAQ:COIN)
Average Upside Potential: ~80.2%
Number of Hedge Fund Holders: 69
Coinbase Global, Inc. (NASDAQ:COIN) operates a platform for crypto assets. Rosenblatt Securities initiated coverage on the company’s stock with a “Buy” rating and the price objective of $305. The firm’s analysts remained optimistic about the future of cryptocurrency and related equities, as they believe that potential regulatory changes and institutional adoption can act as critical drivers. The analysts opine that the new administration is expected to act as a significant positive catalyst for the broader crypto industry. They expect that the regulations will result in increased institutional involvement, which can benefit Coinbase Global, Inc. (NASDAQ:COIN) and have a favourable impact on the broader cryptocurrency market.
Notably, the White House has created a national Bitcoin reserve, which will be financed by Bitcoins that are seized in criminal or civil cases. Rosenblatt Securities analyst Chris Brendler believes that while investing in cryptocurrency can result in price volatility risks, Coinbase Global, Inc. (NASDAQ:COIN) happens to be a clear blue chip in the sector which is well-placed to benefit from positive trends. Furthermore, the Coinbase One subscription model is expected to offer a more stable and predictable revenue stream, which will help reduce dependency on volatile trading volumes.
Patient Capital Management, a value investing firm, released its Q4 2024 investor letter. Here is what the fund said:
“The top performers in the fourth quarter were once again Financials and Travel names. We’ve been over-indexed to them since the pandemic, which has served us well. We strategically added to certain financial names like Sofi Technologies (SOFI) and Coinbase Global, Inc. (NASDAQ:COIN) during the year. Both companies rebounded strongly in the fourth quarter. We believe Coinbase is building the platform for the crypto ecosystem. Certain recent advances (wallet, base improvements, USD Coin) could cause an adoption tipping point. We like that Coinbase continues to widen its moat by persistently investing in innovation.”
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.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
