On Wednesday, the U.S. stock market was once again captivated by AppLovin (APP.US), a leader in the AI sector, as its stock price rose by 1.25% to close at $325.22, setting a new all-time high of $342.507 during the trading session. Noted investment firm Piper Sandler set a target price of $400 for AppLovin, citing significant growth potential in its AI-driven advertising business.
Year-to-date surge exceeds 700%, far outpacing Nvidia
As a global leader in mobile advertising and application technology development, AppLovin’s stock has skyrocketed by 700% this year, far surpassing the nearly 200% increase of Nvidia (NVDA.US), a core enterprise of the AI wave. Driven by robust AI technology, AppLovin has sparked an investment surge in AI software applications worldwide. Its "AI + advertising" solutions, encompassing user outreach, traffic monetization, and ad creative design, have been met with widespread approval from corporate clients.
AppLovin's Q3 financial report shows a 39% year-over-year increase in revenue to $1.198 billion, while net profits soared 300% to $434 million. Through its AI advertising engine AXON 2.0 and intelligent advertising software solutions, the company has achieved efficient matching of ad supply and demand, providing powerful tools for advertisers and app developers.
AI software investment boom catches market attention
AppLovin's success underscores the powerful monetization potential of AI software in commerce. According to surveys, over 72% of businesses use generative AI at least once a week, highlighting that AI is no longer just a tech gimmick but has deeply integrated into document editing, data analysis, customer service, and more. International research firm IDC forecasts that global AI-related spending will reach $632 billion by 2028, with AI software being the fastest-growing segment, expecting a compound annual growth rate (CAGR) of 33.9% from 2024 to 2028.
Analysts optimistic about long-term growth potential
Piper Sandler analyst James Callahan noted in his latest report that while AppLovin's stock price has been reassessed by the market, there is still room for further growth. He believes the company's powerful AI technology has propelled the rapid expansion of its advertising business, and its significant scale advantage—boasting about 1.4 billion daily active users—matches that of Meta Platforms (META.US). Additionally, as AppLovin enters the global e-commerce marketing domain, its business potential remains untapped.
AI software sector remains attractive
Despite potential short-term overbought risks in the AI software sector, Evercore ISI's analysis team maintains that the sector's investment appeal remains strong, with low likelihood of a significant correction before year-end. Analysts generally contend that AI software will become a core revenue-generating pathway for the AI industry, keeping market interest focused on investment opportunities in this segment.
AppLovin's strong performance not only reaffirms its status as an "AI super powerhouse stock" but also instills greater confidence in the future development of AI technology across global markets.
