AppLovin, the new tech darling in the AI industry where performance reigns supreme, surged after releasing its earnings report!

On February 12, 2025, after the US AI application giant AppLovin disclosed its fourth-quarter financial results for 2024, the share price of the US AI application stock AppLovin skyrocketed by 29% to $491.50 in after-hours trading, seemingly on the verge of hitting a new high.

The share price of AppLovin soared by 700% last year, making it the stock with the highest increase in the NASDAQ index. It mainly benefited from its artificial intelligence-driven advertising system.

The company's advertising revenue in the fourth quarter soared by 73% to reach $999.5 million. AppLovin stated that the improvement of its AI model is still in its early stages, and it will achieve more personalized advertising placements in the future.

I have long said that whether there is a bubble in the AI industry depends on whether it can be implemented and monetized, truly enabling enterprises to achieve profitability.

If a company can't make money, no matter how grand the narrative is, it's useless.

And today, we need to take a closer look at this stock – a company engaged in advertising. Why on earth is it so remarkable?

AppLovin with explosive performance and soaring share price

AppLovin's revenue in the fourth quarter was $1.4 billion, a year-on-year increase of 44%, higher than the market's expected $1.26 billion. The earnings per share were $1.73, 38% higher than the expected $1.25, and it soared 3.5 times compared with the same period last year.

Among them, the company's core business, advertising revenue, was $999.5 million, demonstrating strong growth momentum and on the verge of exceeding $1 billion.

This performance is truly astonishing. The performance of each quarter last year was excellent, driving the share price to double successively. However, the market never expected that its performance could be even better.

In addition, AppLovin's first-quarter performance guidance also exceeded the consensus expectations of Wall Street analysts. It is expected that the revenue will be between $1.36 billion and $1.39 billion, with a median of $1.37 billion, higher than the analysts' expected $1.32 billion; the EBITDA median is $870 million, higher than the analysts' expected $795.1 million.

Driven by such high performance, the share price has increased tenfold in the past two years. People have shifted from initial doubt to enthusiasm.

Why is AppLovin so outstanding?

Once again, in the wave of AI, whoever can be the first to make profits in the AI industry will gain the upper hand.

Whether an enterprise can transform AI technology into tangible revenue, find suitable application scenarios, and integrate its resources well is the key to determining its success.

AppLovin is engaged in mobile advertising in the United States. To put it bluntly, it inserts advertisements in various places.

It was initially an advertising company that focused on the mobile game industry, but some time ago, it announced that it would enter the e-commerce advertising field.

The market size of e-commerce advertising is several times larger than that of mobile games, which has thus created room for imagination for AppLovin's share price. And now, the advertising effect of e-commerce is very good.

The business may not seem high-end, but this stock was definitely the shiniest dark horse on Wall Street last year, with the highest increase in the NASDAQ index last year.

Upon a deeper exploration of its business, we can see that it makes excellent use of AI technology.

Through deep learning algorithms, it analyzes users' behaviors and habits, and then precisely delivers advertisements to target users, maximizing the advertising effect and making the best use of the advertising budget.

This model of using AI to transform traditional business not only improves the efficiency of advertising placement but also saves a lot of costs. It is the best example of AI helping traditional industries reduce costs and increase efficiency.

As a result, the company's performance soared, and the share price soared! A perfect Davis double play was formed!

In addition, the company also said that it will enter the TV advertising field. This is another huge market apart from mobile advertising.

The CEO said, "We believe that applying our AI advertising technology to TV advertising can bring greater exposure and conversion for consumer-facing brands."

In short, the room for imagination is getting bigger and bigger.

With the penetration of AI, precise advertising placement in industries such as e-commerce, subscription services, health, and beauty will become the industry standard.

Just imagine that if you are an enterprise and when you invest in advertising for 10 users, 9 of them really need this service, wouldn't you be tempted? And as long as you are tempted, the advertising agency will get your money.

What do institutions think? Is it a good time to invest?

In fact, many institutions have already made early investments in AppLovin.

According to the information, recently, the century-old British asset management giant Baillie Gifford made a huge bet on AppLovin's shares in the fourth quarter of 2024. The number of shares held increased by 54 times compared with the end of the third quarter of 2024.

At the same time, Baillie Gifford continued to reduce its positions in US tech giants such as NVIDIA and Tesla.

You can see that such a century-old investment giant has given up on NVIDIA and Tesla and instead embraced AppLovin. This is enough to show that they have seen better growth potential in AppLovin compared with NVIDIA and Tesla.

In fact, AppLovin is not only favored by Baillie Gifford but has also become a "new tech darling" that Wall Street is vying to pursue.

According to Lipper data, in the latest buying list of the best mutual funds, institutional investors frantically poured into AppLovin in January this year, buying up to $1.11 billion worth of shares.

In addition, the fund holdings of this stock have increased for seven consecutive quarters.

Previously, Bank of America also rated AppLovin as the "top pick" for 2025, optimistic about its software business growth, overall business performance, and development potential in the e-commerce field.

From the above-mentioned bullish views and investment arrangements of many institutions towards AppLovin, we can see its popularity.

So, why is AppLovin so popular? I think there are mainly the following reasons. Firstly, I think it has just perfectly avoided macro risks for now.

AppLovin is not affected by tariffs, and the slowdown of the Federal Reserve's interest rate cuts has not affected the demand for loans or advertising.

With the fading enthusiasm for AI infrastructure construction, the AI application layer has become a new hot spot for capital speculation. Therefore, the waiting capital can pour into such stocks with more confidence.

This is also an important investment idea this year. Choosing AI application layer companies that are immune to macro influences should yield good performance.

From the perspective of the share price trend chart, this kind of performance-driven stock is no longer applicable to technical analysis.

However, we can still find a clue. After each earnings announcement, AppLovin will have a short-term upward trend. At the same time, judging from its current performance growth rate, the current share price and valuation are within an acceptable range.

If you are a long-term and loyal advocate of AI, you might as well learn from Baillie Gifford and reduce the investment in NVIDIA and Tesla in your portfolio and instead embrace AppLovin.$APP