‘Don't Overlook This AI Stock,' Says UBS as It Hikes Price Target on AppLovin Stock
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APP stock is now up 8% in 2025, beating the S&P 500's (SPX) 5% gain. UBS's upbeat call adds to the strong outlook already shared by many on Wall Street.
AI, Margins, and a Lean Model Drive Bullish Outlook
Kuntarich believes that AppLovin deserves a higher multiple — 30 times its estimated 2026 EBITDA, up from 28 — due to its strong margins and lean cost base. He also pointed to the company's advanced use of large language models (LLMs), saying it uses AI to write and roll out code more effectively than big names like Meta (META) and Google (GOOGL). As AppLovin is smaller and runs a leaner operation, the benefits from using AI show up more clearly in its results.
Still, Kuntarich noted some near-term risks that may be weighing on the stock. These include slower-than-expected growth in new e-commerce ad clients. Another is changes to privacy rules, which could make it harder for AppLovin to track users and show targeted ads. He also noted that investor sentiment was hurt after the company was not added to the S&P 500 index.
Even so, he believes the company's long-term outlook remains strong. UBS's recent research showed that the company was doing very well in gaming ads and was closing the gap with Meta in e-commerce ads. He believes the market hasn't fully priced in how much AppLovin's use of AI is helping the business grow. That leaves room for more upside, especially if the company continues to expand its lead in ad tech and show clear results from its AI strategy.
Is AppLovin a Good Stock to Buy?
According to TipRanks, APP stock has received a Moderate Buy consensus rating based on 15 Buys, and three Holds assigned in the last three months. The average AppLovin stock price target is $515.69, suggesting an upside of 407 from its current price.
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