The Bull Case For Duolingo (DUOL) Could Change Following Move to AI-Driven Profitability and Reinvestment

• In recent days, Duolingo announced it has achieved pre-tax profitability and is channeling increased capital into reinvestment, reversing its prior losses.
• This operational shift, powered by Duolingo’s AI-driven learning platform, highlights how technology is reshaping its cost structure and enabling scalable growth in digital education.
• We’ll explore how this transition to profitable growth and AI integration could reshape Duolingo’s investment narrative going forward.

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Duolingo Investment Narrative Recap

To be a Duolingo shareholder, you need to believe in technology-driven transformation and sustainable growth in global digital education, especially as AI helps the company scale and improve efficiency. The recent news of Duolingo reaching pre-tax profitability and increasing reinvestment signals operational progress, but it does not materially change the biggest short-term catalyst, continued traction in international market expansion, or the largest risk, which remains user growth saturation in mature regions.

Of particular interest is Duolingo’s recent Q2 2025 earnings report, which demonstrated significant year-over-year growth in both sales (US$252.27 million, up from US$178.33 million) and net income (US$44.78 million, up from US$24.35 million). This underscores how operational improvements and AI integration directly contribute to the company’s profitability, tying directly into the core catalyst of leveraging technology for scalable growth.

However, what investors should be aware of is that, even with rising profits, challenges like market saturation in the US might impact growth sooner than expected...

Read the full narrative on Duolingo (it's free!)

Duolingo's narrative projects $1.7 billion revenue and $368.7 million earnings by 2028. This requires 23.7% yearly revenue growth and a $251.5 million earnings increase from $117.2 million today.

Uncover how Duolingo's forecasts yield a $451.74 fair value, a 39% upside to its current price.

Exploring Other Perspectives

Twenty-nine members of the Simply Wall St Community have estimated Duolingo’s fair value anywhere from US$265.02 to US$710.92 per share. As you consider these wide-ranging opinions, keep in mind that the company’s momentum in new markets could play a critical role in shaping future results.

Explore 29 other fair value estimates on Duolingo - why the stock might be worth over 2x more than the current price!

Build Your Own Duolingo Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Duolingo research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Duolingo research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Duolingo's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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