AppLovin's cumulative increase this year is 647%, far exceeding nvidia's increase in the same period, with a market cap exceeding one trillion US dollars, becoming the 'AI new favorite' on Wall Street. This company, which started with advertising, has become rich in the AI boom, and its performance in the third quarter far exceeded expectations. The AI advertising engine AXON 2.0 has enhanced its advertising profitability.
Tesla and the Trump Media Technology Group (DJT) stocks surged continuously after Trump's election, but the hottest stock in the US market this week is a new dark horse - AppLovin.
Driven by performance far exceeding expectations and AI profit expectations, AppLovin's stock price soared 46% this Thursday, with the company's total market cap temporarily exceeding $100 billion. Currently, the stock price is at $290.
AppLovin's cumulative increase since the beginning of the year has reached nearly 650%, far exceeding Nvidia's 206% increase during the same period. CNBC has praised it as the best-performing technology stock in the US capital market this year.
Adam Foroughi, the founder of AppLovin, has seen his wealth soar along with the stock price, reaching a net worth of $10.9 billion, ranking 251st on the world's rich list.
How did this advertising technology company achieve a market cap of over a trillion and why has its stock price increased so dramatically this year? Apart from AppLovin's impressive performance, AI also played a crucial role.
With performance far exceeding expectations, the AI advertising engine AXON has helped boost the stock price.
According to public information, AppLovin is an online application game and advertising technology company that profits from e-commerce advertising on mobile applications and game platforms.
In 2021, AppLovin went public on nasdaq. At that time, during the epidemic period, online games experienced a wave of popularity, and AppLovin also profited from it. Google, X, and Meta are all the company's partners. Advertising buys are crucial for the growth of gaming products, and their influence is increasing.
With AI becoming more popular, AppLovin has followed the trend by launching the AI advertising engine model AXON 2.0. The company uses this search engine to develop a new intelligent advertising software solution eDiscovery, which can efficiently conduct large-scale ad auctions between demand and supply in microseconds.
During a recent earnings conference call, Foroughi stated that AppLovin's goal is to achieve an annual growth rate of up to 30%, partly due to its AI-driven Axon 2.0 advertising engine. The company's third quarter performance has exceeded analysts' expectations across the board.
AppLovin's third-quarter report released on November 7th shows quarterly revenue of $1.2 billion, a 39% year-on-year increase; profit of $0.434 billion, a 300% year-on-year increase; adjusted EBITDA profit margin of 60%, including software platform revenue, including AXON AI advertising engine, increased to $0.835 billion, a 66% year-on-year increase, with a adjusted profit margin of this software platform at 78%, exceeding Wall Street expectations.
The company stated in a letter to shareholders:
We achieved excellent results in the third quarter. Our AXON model continuously improves through self-learning, and more importantly, our engineering team made improvements to the technology this quarter. As we continue to improve our models, our advertising partners can successfully make larger scale expenditures.
Martin Yang of Oppenheimer Holdings stated:
Investors once again underestimated how long AXON 2.0 can once again improve the company's performance, expand profit margins, and maintain operational leverage.
Michael Pachter of Wedbush Securities said in a report to investors on Thursday, "AppLovin's performance continues to be impressive," and reiterated its outperform rating, believing that at current levels, the stock has almost no downside potential.
