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Goldman Sachs set a new price target of $445 while keeping its neutral rating on the stock. This follows a week where the company reported high growth in its advertising business. The new target suggests the firm sees room for the stock to rise from its current level of about $356. Other analysts have also been raising their expectations, bringing the average target across all firms to $493. While Goldman Sachs remains cautious with a neutral rating, the higher target reflects the company's ability to earn more profit as its AI-driven advertising tools find more customers for mobile apps and online stores.
Source: Goldman Sachs
After AppLovin reported its November results, we raised our projections for both revenue and net income margin for the year ahead. We have added two new risks to what we track: legal challenges regarding children's privacy and class action litigation concerning the company's AI disclosures. We also increased our assumption for how much the company will spend on buying back its own shares through 2026.
AppLovin reported a highly profitable third quarter, with revenue reaching about 2.18 billion dollars. This was well ahead of the 2.07 billion dollars analysts expected. Net income, the actual profit the company keeps after all costs, grew 72 percent from a year ago to 1.44 billion dollars. This shows the business is becoming more efficient as it grows, keeping 66 cents of every dollar in sales as profit.
The results suggest the company's AXON AI engine, which helps apps find the right users to show ads to, is successfully taking market share from larger rivals. Management also reported an 84 percent margin for adjusted EBITDA, a measure of cash profit before certain accounting costs. This level of profitability is rare for a high-growth software company and supports the view that its AI technology provides a significant competitive advantage.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The company reports quarterly results today. Analysts expect earnings of about 4.03 dollars per share, and the company has a long streak of beating these targets over the last two years. The most important thing to watch is how well the software is expanding into e-commerce. While the business started in mobile games, its long-term value depends on using its AI engine to find customers for online stores and other types of businesses.
A law firm has opened an investigation into whether the company violated securities laws between February and August 2026. The firm is looking into concerns regarding how the company described improvements to its software models during that time. Lawsuits and investigations like this are common for high-growth tech companies, especially after a period of stock price swings. Unless this leads to a formal government investigation or reveals a specific failure in the company's advertising technology, it is a routine legal matter that rarely changes the long-term outlook for the business.
Source: PRNewsWire
Management has beaten its own profit targets for eight straight quarters. The business is growing so fast that even its own forecasts cannot keep up with the actual demand for its software.
| Expectation | |
|---|---|
| EPS | $4.35 |
| Revenue | $2.30B |