Wedbush recently maintained an “outperform” rating on AppLovin (APP) stock, maintaining its price target at $640. Led by Alicia Reyes, Wedbush analysts recently called with the company’s management team to examine its e-commerce push and tech roadmap.
What analysts heard sent a boost in APP stock. Let’s take a closer look.
Most people know AppLovin as a mobile gaming advertising company. But that description is quickly becoming outdated as the company expands to an artificial intelligence (AI) marketing platform that goes beyond gaming.
For one, AppLovin is quickly scaling its e-commerce self-service platform. Coupled with this is the upcoming rollout of new creative AI-powered advertising tools, including 30- to 60-second AI video ads and animated product catalogs.
“As they move toward general e-commerce product availability, highlighted by the upcoming launch of 30-60s AI video ads and animated product catalogs, AppLovin is positioned to achieve massive TAM expansion,” the director and analysts noted.
AppLovin’s core gaming advertising business is already a growth driver. The company expects this business to grow 20% to 30% annually. But e-commerce is a market that Uplovin CEO Adam Foroughi described as potentially five to 10 times bigger than gaming.
To understand why Wall Street is excited, consider AppLovin’s fourth-quarter and full-year 2025 earnings results. AppLovin reported full-year revenue of $5.48 billion, up 70% year-over-year (YOY). Adjusted EBITDA reached $4.51 billion, with an 82% EBITDA margin. Free cash flow reached $3.95 billion, up nearly 91% YOY.
Wedbush believes that combination of high growth and large cash generation puts AppLovin in a category of its own.
One of the biggest concerns raised by investors is competition. Meta Platforms ( META ) is both a partner and competitor, while Alphabet ( GOOGL ) and others compete in the same auction-based ad environment.
Wadbush said this in his head. The company said that in “potential” bidding environments — meaning ad auctions where user identification data is limited — AppLovin prevails. This edge comes from its Axon 2.0 AI module, which is built specifically for the mobile gaming space.
