How AppLovin's (APP) AI Ad Tech Pivot and Gaming Exit May Reshape Its Investment Appeal

• In recent days, AppLovin announced a strategic shift to become a pure advertising technology company after divesting its mobile gaming division for US$900 million, while expanding its AI-powered advertising platform into sectors such as e-commerce and automotive.
• This move reflects strong confidence from analysts and investors, with positive sentiment fueled by the company's advancements in artificial intelligence and successful expansion beyond the gaming industry.
• We'll examine how AppLovin's sharpened AI ad tech focus and sector expansion may shape the company's investment narrative going forward.

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AppLovin Investment Narrative Recap

To be a shareholder in AppLovin, you have to believe in its transformation into a pure-play advertising technology provider, fueled by AI and expanding well beyond its mobile gaming roots. The recent US$900 million divestment of its gaming business further cements this vision, directly addressing dependence on gaming and enhancing the company’s near-term growth catalyst, sector diversification through AI ad tech, while diminishing one of its biggest historical risks. Any continued regulatory scrutiny or tightening of data privacy rules remains a potential headwind, though this shift does not materially alter that risk in the short term.

Among recent developments, AppLovin’s major rollout of its AI-powered, self-service platform targeting e-commerce advertisers is particularly relevant. This move is expected to broaden its advertiser base and support growth beyond gaming, tying directly to the company’s efforts to diversify revenue streams, a key near-term catalyst highlighted by analysts following these announcements.

However, investors should be aware that, despite strong momentum, heightened regulatory risk around data privacy ...

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

AppLovin's narrative projects $10.5 billion in revenue and $6.2 billion in earnings by 2028. This requires a 22.2% yearly revenue growth and a $3.7 billion increase in earnings from $2.5 billion today.

Uncover how AppLovin's forecasts yield a $649.96 fair value, in line with its current price.

Exploring Other Perspectives

Simply Wall St Community members provided 26 unique fair value estimates for AppLovin, ranging widely from US$318 to US$663 per share. Opinions are equally split, but many view sector expansion as a catalyst for future revenue, so it’s important to consider how privacy regulation could affect returns.

Explore 26 other fair value estimates on AppLovin - why the stock might be worth as much as $663.26!

Build Your Own AppLovin 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 AppLovin research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free AppLovin research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AppLovin'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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