Duolingo (DUOL) Fell Following OpenAI’s Product Demonstration

Baron Funds, an investment management company, released its “Baron Technology Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities rallied in the third quarter following the previous quarter. In the third quarter, the fund returned 5.89% (Institutional Shares) but underperformed the MSCI ACWI Information Technology Index’s (the Benchmark) 12.76% return, Invesco QQQ Trust’s (the QQQ) 8.94% return, and the S&P 500 index’s 8.12% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Technology Fund highlighted stocks such as Duolingo, Inc. (NASDAQ:DUOL). Duolingo, Inc. (NASDAQ:DUOL) is a language learning platform that offers courses in 40 different languages. The one-month return of Duolingo, Inc. (NASDAQ:DUOL) was -42.03%, and its shares lost 38.66% of their value over the last 52 weeks. On November 10, 2025, Duolingo, Inc. (NASDAQ:DUOL) stock closed at $192.80 per share, with a market capitalization of $8.913 billion.

Baron Technology Fund stated the following regarding Duolingo, Inc. (NASDAQ:DUOL) in its third quarter 2025 investor letter:

“Despite language learning platform Duolingo, Inc. (NASDAQ:DUOL) reporting a strong second quarter with 40% daily active user growth and 41% revenue growth, the stock traded down intra-quarter following an OpenAI product demonstration around language learning and third-party data trends that indicated slowing user growth on the app. While the OpenAI demo was impressive, we believe that OpenAI’s offering requires substantial effort on the part of the user, lacks Duolingo’s expert-approved exercises, and most importantly, lacks the engaging gaming mechanics that Duolingo is known for and keeps users motivated to keep coming back. Duolingo was also negatively impacted by third-party data trends showing a deceleration in user growth, following social media controversy over the company’s decision to use more AI to slow hiring. While we believe that daily active user growth has slowed from second quarter’s 40-plus percent year over year level, we cbelieve that the company should continue to grow users north of 20% (and revenue growth ahead of user growth) English speaking regions continue to maintain strong engagement and user growth, and advanced English courses unlock a larger addressable market in the hundreds of millions. The company’s newest AI offering, Max, allows users to practice speaking with a virtual tutor, allowing for greater engagement, improved learning, and higher monetization for the company. We continue to closely monitor trends in user growth and monetization.”

Is Duolingo, Inc. (DUOL) the Unstoppable Growth Stock to Invest in Now?

Duolingo, Inc. (NASDAQ:DUOL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 55 hedge fund portfolios held Duolingo, Inc. (NASDAQ:DUOL) at the end of the second quarter, up from 51 in the previous quarter. Duolingo, Inc. (NASDAQ:DUOL). posted 36% year-over-year growth in the third quarter of 2025. While we acknowledge the risk and potential of Duolingo, Inc. (NASDAQ:DUOL) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Duolingo, Inc. (NASDAQ:DUOL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Duolingo, Inc. (NASDAQ:DUOL) and shared the list of best beaten down growth stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.