Jim Cramer Says “Wall Street’s Terrified That AI Will Eat AppLovin Alive”

AppLovin Corporation (NASDAQ:APP) is one of the noteworthy S&P 500 stocks Jim Cramer highlighted. During the episode, Cramer called the recent massive single-day sell-off “exaggerated.” The Mad Money host commented:

Before the break, I went over January’s 10 best-performing stocks in the S&P 500… But what were the worst performers in the S&P 500 in the first month of the year? Okay, most of these are enterprise software companies where investors are worried about AI displacement. These… used to be the hottest stocks in the world. Now, the worst performer, AppLovin was down nearly 30%. The former market darling got its start helping mobile game developers expand their reach, sell advertisements, though lately, it’s expanded into other areas like e-commerce advertising. Still, the core business is about ads for mobile games.

This stock had a real bad month, but it got hideous last Friday when it plunged 17% after Google announced a new AI platform called Project Genie. This thing lets you build immersive digital worlds with simple, plain language prompts. You can literally use it to make your own video games, say nothing of making ads for already existing mobile games. Anything connected to the gaming cohort got obliterated. Now, I think the sell-off was pretty, I thought it was exaggerated, but at the end of the day, Wall Street’s terrified that AI will eat AppLovin alive. So people simply aren’t willing to pay as much for the company’s earnings. A month ago, the stock was trading at more than 42 times forward earnings. Now, it’s trading at 32 times forward earnings, and the pain actually may not be over. I never want to compete against Google in this stuff. They are monstrous competitors. I don’t want to own the stock.

Photo by AlphaTradeZone

AppLovin Corporation (NASDAQ:APP) provides a software platform that helps advertisers and app developers market and monetize their content. The company offers advertising solutions, analytics tools, connected TV services, and mobile games.

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