A Look at AppLovin (APP) Valuation as AI Strategy Delivers Growth and Gaming Exit Spurs New Focus

AppLovin (APP) is catching investor attention after reporting sharp gains in revenue and operating margins, driven by its AI-fueled AXON 2.0 platform. The company is also pivoting further into advertising technology as it sells its gaming unit.

See our latest analysis for AppLovin.

AppLovin’s momentum has been hard to ignore. The stock has surged more than 52% so far in 2025, with total shareholder return topping 56% over the past year and exceeding 3600% in three years. After climbing sharply on AI-powered earnings and a substantial buyback program, shares have recently dipped from all-time highs as investors grapple with broader tech volatility and a market rotation out of high-valuation growth names. Despite the short-term turbulence, appetite for AppLovin’s pivot into advertising technology and its rapid revenue growth keeps investors optimistic about its long-term story.

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With such rapid growth and bullish analyst targets, investors are left wondering whether AppLovin’s premium is justified or if recent gains have pushed the stock ahead of its fundamentals. Investors may ask whether there is still a window to buy, or if the market has already priced in future growth.

Most Popular Narrative: 27.6% Undervalued

AppLovin closed at $520.26, but the narrative’s fair value estimate is $718.71. This significant gap has caught attention among analysts and investors. The story behind this calculation centers on catalysts with the potential to reshape AppLovin’s growth trajectory, making this a hot topic for those watching the next major move.

Expanded rollout of the self-service AXON ads manager and Shopify integration is expected to open AppLovin's platform to a massive new base of small and mid-sized advertisers globally, dramatically increasing advertiser count and driving sustained uplift in topline revenue.

Opening up access to international markets for web-based advertising (beyond the U.S.) will allow AppLovin to tap into significant, underpenetrated audiences and new advertiser cohorts. This positions the company to accelerate global market share gains and topline revenue growth.

Read the complete narrative.

How does this bold valuation stack up? Here is your teaser: the narrative relies on assumptions of explosive revenue growth and stunning profit expansion, plus a future profit multiple the crowd will want to see. Curious which expectation drives that eye-popping gap to fair value? The full narrative reveals which of these ambitious financial projections make the difference. Will you agree?

Result: Fair Value of $718.71 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifts in data privacy regulations or a slowdown in mobile gaming could quickly challenge the positive long-term outlook for AppLovin’s growth story.

Find out about the key risks to this AppLovin narrative.

Another View: Market Multiples Show a Caution Sign

While the fair value narrative projects a major upside, the market’s own price-to-earnings metric tells a more cautious story. AppLovin trades at 60.3x earnings, which is significantly higher than the industry average of 28.8x and even above its own fair ratio of 59.1x. This premium suggests the market may have already priced in much of the company’s expected growth, leaving little room for error if the future falls short. Could chasing momentum here mean taking on greater valuation risk?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own AppLovin Narrative

If you want to dig deeper or see things from your own perspective, it’s quick and easy to assemble your own view using the data and projections here. You could have a personalized thesis in just a few minutes. Do it your way.

A great starting point for your AppLovin research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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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