Why AppLovin Stock Was Gaining Today

Motley Fool
2025.07.31 17:42
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Shares of AppLovin (APP) rose 8.2% today, driven by positive sentiment in the AI and digital advertising sectors following strong earnings reports from Meta Platforms and Microsoft. Meta's revenue surged 22% to $47.5 billion, highlighting robust demand for digital ads, particularly on Facebook and Instagram, aided by AI advancements. AppLovin, leveraging its AI-powered recommendation engine, is poised for growth, with analysts anticipating a 13% revenue increase to $1.22 billion in its upcoming earnings report on Aug. 6, and a potential doubling of earnings per share to $2.32.

Shares of AppLovin (APP 7.47%), the fast-growing adtech company, were soaring today even as there was no news out on the company. Instead, the stock seemed to benefit from a wave of bullish sentiment for artificial intelligence (AI) and digital advertising stocks after strong reports from both Meta Platforms and Microsoft last night.

As a result, AppLovin stock was up 8.2% as of 12:53 p.m. ET, while those two big tech stocks gained as well.

Image source: Getty Images.

AppLovin rides Meta's coattails

Strong results from Meta in particular seemed to benefit AppLovin, as Meta's report showed off healthy demand in the digital advertising market.

Revenue jumped 22% to $47.5 billion, and advertising made up 98% of its revenue, showing strong demand for ads on Facebook and Instagram.

Meta credited AI improvements for driving both growth in ad impressions and an increase in the price per ad, reflecting increased demand and ROI. That trend, along with Microsoft's strong quarterly numbers, set off a wave of bullishness for stocks like AppLovin, which is high-priced and high-growth and offers exposure to both adtech and AI.

In fact, AppLovin may be ahead of the curve in AI-driven advertising, as its AI-powered recommendation engine, Axon, has been a key source of growth for the company recently.

What's next for AppLovin?

As an expensive, high-growth stock, AppLovin tends to be volatile, and today's gains reflect an improved perception of its future growth ahead of its own earnings report on Aug. 6.

Investors are expecting 13% revenue growth to $1.22 billion in the quarter, though that includes the sale of its mobile apps business. Excluding that, organic growth will be much stronger. On the bottom line, analysts expect earnings per share to essentially double to $2.32, a better reflection of the underlying growth in the business.

The stock has the potential to pop again if it can beat those estimates.

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