We recently published a list of Top 10 Buzzing AI Stocks Now. Since Applovin Corp (NASDAQ:APP) ranks 8th on the list, it deserves a deeper look.
Following the aggressive rate cut by the Federal Reserve, the market roared to new highs but quickly lost enthusiasm as investors look for clues on what might be ailing the economy that pushed the Fed to go more dovish than expected. However, others think the bull market is going to continue.
BMO Capital’s Brian Belsk has raised the S&P 500 target for 2024 to 6,100 from 5,600. Talking to CNBC in a latest program, Belsk said the “resiliency” of this bull market is “undoubted.”
The analyst said that the stock market is going higher through the end of this year.
“We do believe that the Fed is doing a great job. We believe the Fed that we are not hitting into a recession. We believe the Fed that we are heading into more of a soft landing,” the analyst said.
Belsk thinks we are in the “1995-1996 environment” where we can “handle” the 24x earnings multiple.
The analyst added that the Mag. 7 stocks underperformed the market in the third quarter and yet the broader market grew, which shows the market rally is broad.
For this article we chose 10 AI stocks trending on the back of latest news, earnings 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).
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Applovin Corp (NASDAQ:APP)
Number of Hedge Fund Investors: 54
Ankur Crawford, Alger executive VP, while talking to CNBC in a latest program said that in about 3 to 5 years AI is going to provide us with superhuman intelligence.
“All of the CapEx being spent today is whole-heartedly justifiable because the opportunity to monetize that AI by that time is beyond what anyone has contemplated in the market so far.”
Ankur Crawford believes Applovin Corp (NASDAQ:APP) is one of the top underappreciated AI stocks.
She said that AppLovin is a gaming advertising platform.
“They are using AI to basically make you download more games and they can monetize inventory better than anyone else can. They have 70% market share, and they are going into ecommerce as well. So, instead of serving you up a game, they will serve you up a product and monetize their inventory better than they were able to before,” the analyst said.
Crawford said Applovin Corp (NASDAQ:APP) is “interesting” because their cost structure is already “embedded.”
“For every dollar they get, they get a almost a 100% fall through on the margin line. So, massively cash-flow generative. The Street has $6 in earnings (estimate) in 2026,” the analyst added.
Carillon Scout Mid Cap Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q2 2024 investor letter:
“AppLovin Corporation (NASDAQ:APP) was another top contributor. The advertising technology platform, focused on mobile applications, reported strong earnings results in early May. Its AI-driven Axon 2.0 mobile advertising platform continues to produce strong returns for customers, which is leading to more than expected spending on the platform. Although the one-year anniversary of Axon 2.0’s release occurs this year, the company is already working to expand beyond mobile applications with opportunities in e-commerce and connected television. We believe AppLovin’s valuation, free cash flow, and leading market share remain attractive.”
Overall, Applovin Corp (NASDAQ:APP) ranks 8th on Insider Monkey’s list titled Top 10 Buzzing AI Stocks Now. While we acknowledge the potential of Applovin Corp (NASDAQ:APP), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.
