What Happened?

Shares of mobile app advertising platform AppLovin (NASDAQ: APP) jumped 51.7% in the morning session after the company reported a classic "beat and raise" quarter as efforts to optimize its AI-powered advertising platform seem to be yielding results. AppLovin beat analysts' revenue, EBITDA, and EPS expectations during the quarter.

Looking ahead, Q4 guidance was also very encouraging, with revenue and EBITDA guidance coming in ahead and the latter well ahead. In addition, the company reiterated the long-term guidance of sustaining 20-30% annual growth, showing management's strong conviction in the growth strategy. Notably, AppLovin announced plans to diversify beyond the gaming audience by expanding into new verticals such as e-commerce.

Zooming out, we think this was a great quarter amid potentially lower expectations given the company's uneven performance in the last few quarters.

Is now the time to buy AppLovin? Access our full analysis report here, it’s free.

What The Market Is Telling Us

AppLovin’s shares are very volatile and have had 26 moves greater than 5% over the last year. But moves this big are rare even for AppLovin and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 24.7% on the news that the company reported strong fourth-quarter results with revenue, adjusted EBITDA, and EPS exceeding Wall Street's expectations. The solid performance was driven by a combination of factors, including a strong holiday season, mobile advertising market growth, and software platform improvements.

Looking ahead, guidance for Q1 2024 revenue and adjusted EBITDA were both convincingly ahead as well. Overall, this was a really good quarter that should please shareholders.

AppLovin is up 531% since the beginning of the year, and at $244.76 per share, has set a new 52-week high. Investors who bought $1,000 worth of AppLovin’s shares at the IPO in April 2021 would now be looking at an investment worth $3,754.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.