1. Applovin Corp. (NASDAQ:APP)
Moore Global Investments’ Stake: $37.83 million
Number of Hedge Fund Holders: 95
Average Upside Potential as of May 2: 64.59%
Applovin Corp. (NASDAQ:APP) builds a software-based platform for advertisers to enhance the marketing and monetization of their content. It operates through two segments: Advertising and Apps. It serves individuals, small and independent businesses, enterprises, advertisers & advertising networks, mobile app publishers, and indie studio developers.
The company’s AXON algorithm, which is a core component of its AI-powered advertising platform, is undergoing self-learning and engineering enhancements for growth. Applovin is expanding its AI advertising capabilities beyond mobile gaming, with a successful e-commerce pilot. Early data shows advertisers seeing substantial returns. The company plans to scale this segment in 2025 by reallocating resources and launching a self-service platform to reach more advertisers.
On April 11, UBS analyst Chris Kuntarich lowered the price target on AppLovin from $630 to $450 while keeping a Buy rating. The analyst addressed concerns stemming from a short report that made e-commerce advertisers more cautious. However, Kuntarich does not expect any major algorithm adjustments in Q1 2025. Kuntarich believes the company can achieve a CAGR of over 40% in advertising revenue over the next 3 years.
ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q1 2025 investor letter:
“AI-beneficiary and strong fourth-quarter performer AppLovin Corporation (NASDAQ:APP) came under pressure from several reports from short sellers seeking to capitalize on a reversal in the company’s strong momentum amid the broader tech retreat. However, we believe the AI-enabled advertising software platform continues to be one of the best AI opportunities within the mid cap market. Recent positive channel indicators for its e-commerce business point toward a solid and persistent future of attractive returns for AppLovin, and we used the short-natured weakness to add to our position.”
While we acknowledge the growth potential of Applovin Corp. (NASDAQ:APP), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
