Why AppLovin (APP) Is Up 6.8% After Exiting Gaming To Double Down On AI Ads

• Earlier in December, AppLovin presented at the 53rd Annual Nasdaq Investor Conference in London, highlighting progress in its AI-powered advertising and mobile app monetization platforms.
• The company’s decision to exit its gaming division and push deeper into AI-driven advertising for e-commerce, fintech, and automotive marks a material shift toward becoming a broader ad-tech platform competitor to Google and Meta.
• We’ll now examine how this pivot toward AI-powered e-commerce advertising reshapes AppLovin’s existing investment narrative and risk-reward profile.

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AppLovin Investment Narrative Recap

To own AppLovin, you have to believe its AI-driven ad platform can keep attracting advertisers and budgets beyond gaming, while sustaining its strong profitability. The latest Nasdaq conference appearance and analyst enthusiasm reinforce the near term catalyst around AXON adoption, but do not meaningfully change the key risk that tighter data privacy rules or platform policy shifts could still constrain targeting and margin strength.

Among recent developments, AppLovin’s Q3 2025 results stand out, with revenue rising to US$1,405.05 million and net income to US$835.55 million, alongside robust Q4 guidance. For investors watching the AI e-commerce push, these numbers and the company’s unusually high free cash flow margins underpin its capacity to keep investing in AXON, self serve tools, and expansion beyond gaming while absorbing potential volatility.

Yet despite this momentum, the heightened regulatory and SEC scrutiny around data practices is something investors should be aware of if...

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

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

Uncover how AppLovin's forecasts yield a $737.21 fair value, in line with its current price.

Exploring Other Perspectives

Thirty fair value estimates from the Simply Wall St Community span roughly US$318 to US$989 per share, underlining how far apart individual views can be. Against that backdrop, the thesis that AXON’s self serve rollout and e commerce expansion could materially increase advertiser count and revenue gives you one more angle to weigh when comparing these very different expectations for AppLovin’s future performance.

Explore 30 other fair value estimates on AppLovin - why the stock might be worth less than half the current price!

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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