We recently published a list of 12 Stocks to Buy with Exponential Growth in 2025. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other 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.
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).
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
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.”
Overall, APP ranks 1st on our list of stocks to buy with exponential growth in 2025. 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. This article is originally published at Insider Monkey.
