The Zhitong Finance App learned that on Wednesday EST, Piper Sandler, a well-known investment agency on Wall Street, began to pay attention to the “AI superbull stock” that has far surpassed Nvidia's since this year — that is, the mobile advertising marketing and mobile application technology development company AppLovin (APP.US), and stated that even if AppLovin's stock price has repeatedly reached new highs, the company's stock price “still has significant room to rise.” The investment agency gave AppLovin a target price of up to $400. By the close of the US stock market on Wednesday, AppLovin shares rose 1.25% to $325.22, hitting an intraday record high of $342.507.

According to information, AppLovin's stock price has risen by an astonishing 700% since this year, far exceeding the nearly 200% increase of chip giant Nvidia (NVDA.US), which is at the core of the artificial intelligence craze. AppLovin, an advertising and marketing giant famous in the global game industry and mobile advertising industry, “broke the circle” and became an “AI superstar” in the minds of global investors. It was also AppLovin that set off an investment frenzy around AI applications in the global stock market, driving the stock prices of AI application leaders in the Japanese, Korean, European, and Hong Kong A stock markets to soar sharply recently.

As AI computing power resources and application software deployment covering AI hardware infrastructure and AI models gradually take shape, AppLovin has begun to provide global enterprises with “AI+ advertising marketing solutions” based on artificial intelligence technology, covering an advertising and marketing ecosystem that includes functions such as user reach, traffic monetization, creative advertising design, and marketing data detection. On November 7, the three-quarter report released by AppLovin surpassed market expectations. Its revenue for a single quarter was about 1.198 billion US dollars, an increase of 39% over the previous year; net profit reached 0.434 billion US dollars, a sharp increase of 300% over the previous year.

It is reported that using AI advertising software solutions, AppLovin can efficiently match supply and demand between mass advertising auctions. The company launched AXON 2.0, an AI advertising engine model, and developed a smart adware solution based on this. AppLovin also provides “AI+ advertising marketing” services to advertisers and application developers (advertising publishers).

These technology companies, which focus on AI software, have recently advanced by leaps and bounds in commercial monetization capabilities, stimulating the “FOMO sentiment” in the market. Combined with the peak corporate spending season in the fourth quarter, many large corporate customers are preparing to provide higher budgets for AI software applications. This series of catalysts has boosted short-term hype in the AI software sector.

AI is no longer a gimmick! AI software is likely to be the core revenue generation path for artificial intelligence

According to a survey of 800 business leaders of large enterprises, over the past year, the application of artificial intelligence generation has rapidly penetrated into the various daily operations of enterprises. From information technology to human resources and other fields, AI is no longer a simple hype gimmick. According to a report from the Wharton School of the University of Pennsylvania and marketing consulting firm GBK Collective, approximately 72% of business decision makers report that they use generative artificial intelligence at least once a week, a figure higher than 37% in 2023, the first year of the survey.

The report found that companies have surpassed the initial hype and surprise about generative artificial intelligence and moved to more practical applications. The most cited uses include writing and editing documents and proposals, accounting for 64% of total respondents, followed by data analysis and analysis at 62%. Other features mentioned by more than half of decision makers include customer service and support, fraud detection and prevention, and financial forecasting and planning.

According to a recent forecast from IDC's “Global Artificial Intelligence and Generative Artificial Intelligence Spending Guide”, the agency expects global artificial intelligence (AI) related spending (focusing on AI-enabled applications, AI chips, and related IT and business services) to at least double the current level and reach approximately $632 billion by 2028. Artificial intelligence, particularly generative artificial intelligence (GenAI), is rapidly integrated into various terminal devices and products. IDC expects global AI spending to achieve a compound annual growth rate (CAGR) of 29.0% during the forecast period 2024-2028.

According to IDC, software or applications will be the largest category of AI technology spending, accounting for more than half of the overall AI market in most predictions. IDC expects artificial intelligence software to grow at a CAGR of 33.9% over the five-year period (2024-2028).

AppLovin's stock price has repeatedly reached new highs, and the strong rise may not have stopped

Many investment institutions, including Piper Sandler, are still optimistic about the stock price performance of AI software leaders until the end of the year. The analysis team from Evercore LSL said that although AI software stocks are overbought to a certain extent in the short term and may need to absorb some post-election emotional gains, the industry is still attractive for investment, and it is unlikely that there will be a significant correction before the end of the year.

“AppLovin's stock price has been properly re-evaluated after the accelerated development driven by artificial intelligence, but we still believe there is room for the stock price to rise.” Piper Sandler analyst James Callahan wrote in a recent report to clients. Callahan rated AppLovin's stock as “overweight,” and the target price for the stock within 12 months was set at $400. He said that the company's artificial intelligence technology has driven a crazy increase in the revenue scale of the advertising and marketing business. “The growth of advertising and marketing is far higher than the market level, and there is room for further improvement in the monetization space per minute level.”

Furthermore, the company's size is impressive because it has approximately 1.4 billion daily active users who interact deeply with MAX mediation, a figure comparable to Facebook's parent company Meta Platforms (META.US). Callahan said that as the company has just entered the global e-commerce marketing sector (some Wall Street agencies have yet to calculate this), the stock is worth a higher premium compared to its peers.