Investing

This Growth Stock Surged 758% in 2024. Here's Why 2025 Could Bring More Massive Gains.

Chris MacDonald

Published: February 11, 2025 11:25 am

AppLovin (NASDAQ:APP) is a mobile app publisher and developer of AI-driven monetization tools that’s seen a strong rebound over the past year, as investors piled into companies that have the ability to accelerate ad spending and adoption.

AppLovin’s share price surged more than 750% last year and is already up 16% on a year-to-date basis. Thus, as far as companies with momentum are concerned, AppLovin remains a top pick investors may want to at least keep on the radar.

Of course, trees don’t grow to the sky, and it’s entirely possible that APP stock has gotten ahead of its skis. But with plenty of AI-related catalysts driving this move, there are reasons why many analysts believe this year’s return could provide still-high returns.

Let’s dive into the bull case behind why this stock could have more upside potential ahead.

Key Points About This Article:

• AppLovin is among the AI beneficiaries that’s seen incredible share price appreciation over the past year.
• Let’s dive into whether this growth can continue, and what might drive these gains over the course of 2025.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

What Drove Growth in 2024

AppLovin’s performance last year has been incredible, leading to such outlandish expectations for this year. Trading at a market capitalization of $125 billion, a similar return would position this company in the $1 trillion range, and few investors and market participants expect the company can repeat its performance in 2025.

However, it’s certainly worth looking at what drove AppLovin’s growth last year, as these growth drivers will play a big role in how the stock performs this year.

The company saw surging profitability, bringing its earnings into the black as revenue accelerated nearly 40%. Increasing adoption of the company’s AXON ad discovery services and robust AI investments drove significant growth in AppLovin’s adtech business. Third-quarter revenue soared 39% to $1.2 billion, with net income climbing 300% to $434 million. Notably, AppLovin’s AI-powered Axon engine and AppDiscovery marketing software propelled two-thirds of its revenue, making the software platform its main growth driver.

With its surge to a market cap above the key $100 billion level, AppLovin now ranks among the top 100 S&P 500 companies. And despite slower growth in its mobile games segment, investors seem to like the company’s growth trajectory given its catalysts (which are centered around what everyone cares about right now – AI).

Where Could This Stock Be Headed in 2025?

AppLovin’s phenomenal surge in its stock price throughout 2024 has certainly solidified the company’s position as one of the top-performing technology stocks of the year. In order for AppLovin to see share price appreciation even remotely close to that of last year, the company will need to see significant acceleration in terms of adoption for its AI-powered advertising platform, AXON 2.0. This platform is clearly the crown jewel for most investors, who believe the company could see significant top (and perhaps more importantly bottom) line growth as this high-margin business surges. 

Companies looking to maximize their ad revenue will continue to flock toward platforms such as those offered by AppLovin. For now, the company’s market share in this space, and its innovative and disruptive underlying technology, position the company well for growth. That’s the bull case, anyway.

So, Is AppLovin a Buy?

Overall, analysts believe that AppLovin’s stock price is fairly valued, with the current consensus estimate for APP stock right around where it’s currently trading. For those looking for a company with major upside (at least from this perspective), this is one factor to keep in consideration. 

That said, there are plenty of stocks in the market that rise faster than analysts can update their models. To a certain extent, AppLovin looks like one of those companies that will continue to force analysts to raise their price targets, so long as the company can continue to outperform expectations on the earnings front.

Of course, I think there are some downside risks with a stock like this that has risen so rapidly in such a short period of time. But if the market is right about this company, it’s one that could clearly grow into its valuation over time. We’ll have to see.