AppLovin has taken over as the top-performing artificial intelligence (AI) stock in 2024, thanks to a significant surge in its share price following the release of its third-quarter results. The company’s Axon 2 AI-based advertising technology has driven explosive growth, with software platform revenue soaring 66% to $835 million.
AppLovin owns a portfolio of gaming apps but focuses on an adtech solution to help mobile app developers attract users and monetize their apps. Since the launch of its Axon 2 platform in 2023, the company has seen remarkable growth, with operating leverage playing a key role in its success.
The company’s Q3 results showed significant revenue growth, with overall revenue climbing 39% to $1.2 billion, beating the consensus estimate. Gross margin improved to 77.5%, and earnings per share surged from $0.30 to $1.25. The company also produced $551 million in operating cash flow.
AppLovin has guided for fourth-quarter revenue growth of 30-32%, which is above its long-term goal, but still within reach. With the potential to expand beyond gaming into e-commerce and other verticals, the company’s prospects look promising.
Despite the significant run-up in share price, the author believes AppLovin remains a buy. With a valuation ratio below 1, it appears undervalued, especially if growth continues at a 30% pace. The company’s potential to move beyond gaming with Axon 2 opens up significant upside opportunities.
Source: https://www.fool.com/investing/2024/11/09/nvidia-palantir-ai-juggernaut-up-applovin-buy