Mobile app development company AppLovin may have soared more than 700% this year. Piper Sandler thinks the stock is an artificial intelligence winner with more room to run. The firm initiated coverage with an overweight rating and $400 price target on shares, implying shares could climb an additional 24.5% from Tuesday’s close. The company’s online advertising business has grown thanks to its AI-powered advertising engine called Axon. In its third-quarter earnings report , AppLovin reported a 66% year-over-year increase in software platform revenue. APP YTD mountain AppLovin in 2024 “The stock is up over [700%] YTD, more recently driven more by multiple expansion than estimate revisions. But we still think the stock can outperform,” analyst James Callahan wrote. “APP estimate revisions have outpaced the NASDAQ every quarter since 1Q23 and the delta has been improving the last 3 quarters.” While AppLovin’s advertising segment has been a key generator of growth, the company’s mobile gaming business is also set to rebound as consumer spending in the segment rises, per Callahan. “APP’s impressive revenue growth has occurred despite a challenged overall market. Today, volumes are driving the majority of revenue growth vs pricing which we view to be positive as APP takes volume share and can ultimately grow pricing as the auction normalizes,” he wrote. AppLovin’s expansion into e-commerce also will help sustain the stock’s growth, the analyst said. Shares added 1.9% Wednesday in the premarket following the announcement.
