We recently published a list of 10 AI Stocks to Watch on Latest News and Analyst Ratings. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other AI stocks to watch on latest news and analyst ratings.
AI discussion boards online are buzzing with a new development where tech experts are pointing to a possible plateauing of performance in artificial intelligence applications.
CNBC’s Deirdre Bosa in a latest program quoted tech investor Ben Horowitz, who said in a recent podcast that he’s not seeing performance improvement despite increasing GPUs.
“We’re increasing GPUs at the same rate, but we’re not getting the intelligence improvements at all out of it.”
OpenAI is reportedly facing similar problems with its upcoming AI model.
“The Information reports that the quality increase in OpenAI’s upcoming advanced model, Orion, is smaller than the jump seen between the last two flagship models, GPT-3 and GPT-4. In other words, generational advancements may have peaked as the models are essentially running out of data to train on,” Bosa said.
While the next jump in AI performance is far away in the future, the possibilities this technology has unlocked based on the existing data and resources are keeping investors and Wall Street analysts busy.
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In this article we take a look at top AI stocks trending on the back of latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Investors: 54
AppLovin Corp (NASDAQ:APP) shares are trending after the company posted strong quarterly results and received praise from Wall Street.
Daiwa Securities raised its price target after the mobile technology company posted stronger-than-expected third-quarter results.
Analyst Jonathan Kess upgraded AppLovin Corp (NASDAQ:APP) to “outperform” from “neutral,” citing management’s effective execution since the introduction of Axon 2.0 in the first quarter of 2023. “Growth of 20-30% is achievable in the mobile gaming sector alone as AppLovin Corp (NASDAQ:APP)’s AI continues to improve, driving company and market expansion,” Kess noted, adding that recent tech upgrades from Q3 2024 have long-term growth potential. He pointed to fresh opportunities in e-commerce and connected TV, expected to contribute revenue in fiscal 2025, while Street estimates remain conservative, suggesting further upside. AppLovin Corp (NASDAQ:APP)’s position as a market leader stands out as its peers face distractions or a lack of focus on mobile gaming, alleviating prior concerns about growth peaking.
Kess raised his price target on AppLovin Corp (NASDAQ:APP) significantly to $280 from $80, highlighting the company’s expanding market, rising profitability, and increasing free cash flow despite the stock’s strong year-to-date performance.
Some believe despite the latest bull run the stock has more room to run. AppLovin Corp (NASDAQ:APP) primarily focuses on helping game developers attract and monetize users. Game developers promote their games as advertisers when they seek to acquire users. AppLovin Corp (NASDAQ:APP)’s AppDiscovery program supports these developers in running user acquisition (UA) campaigns. After securing app installs, developers turn to revenue generation. AppLovin Corp (NASDAQ:APP)’s MAX platform serves as a monetization tool for mobile apps, where developers can act as publishers by offering ad space for programmatic auctions, with advertisers bidding on these spots. AppLovin Corp (NASDAQ:APP) earns a percentage of the ad spending revenue that publishers receive through the MAX platform.
If AppLovin Corp (NASDAQ:APP) meets its fourth-quarter 2024 revenue forecast midpoint of $1.25 billion, this would reflect 31% year-over-year growth for the quarter. This forecast exceeded analysts’ expectations, who estimated $1.18 billion in fourth-quarter revenue. If AppLovin Corp (NASDAQ:APP) hits the midpoint of its Q4 adjusted EBITDA guidance at $750 million, adjusted EBITDA would grow 57.5% compared to the same period last year.
AppLovin Corp (NASDAQ:APP)’s one-year forward PEG (price-to-earnings-to-growth) ratio currently stands at 1.78, based on a forward P/E of 54.78 and an estimated EPS growth rate of 30.65%. Typically, growth stocks are seen as overvalued at a PEG ratio above 2.0. At a one-year forward PEG of 2.0, AppLovin Corp (NASDAQ:APP)’s stock price could reach $324.28—an 11.81% gain from its November 9 close.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q3 2024 investor letter:
“Stock selection in the IT sector was the greatest contributor to relative performance, driven by AppLovin Corporation (NASDAQ:APP), which operates a software-based platform for advertisers to enhance the marketing and monetization of their content, particularly in mobile apps. We believe the company is one of the best examples of an AI beneficiary in the mid cap market, as it has already incorporated AI capabilities into its platform, translating into more effective take rates on clients’ mobile games and transactions. We believe mobile games represent only the tip of the iceberg of AppLovin’s potential for its AI-enabled platform and that it has a strong growth trajectory over the next few years.”
Overall, APP ranks 8th on our list of AI stocks to watch on latest news and analyst ratings. While we acknowledge the potential of APP, our conviction lies in the belief that under the radar 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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Disclosure: None. This article is originally published at Insider Monkey.
