AppLovin Corp. (APP) just delivered a textbook example of a news catalyst-driven breakout, with its Q4 earnings report sending shares up as much as 38% intraday before closing up 24%. The stock hit an all-time high of $525 before pulling back to around the $500 level as of February 14, 2025.
This is what momentum looks like. The company crushed expectations, announced a major business shift, and got a wave of analyst price target hikes. But is it still a buy after a near 1,000% run in the past year? Or is it getting too crowded?
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Massive Catalyst: Blowout Q4 Earnings and a Business Shift
AppLovin smashed expectations with fourth-quarter earnings that saw revenue grow 44% year-over-year to $1.37 billion, well ahead of the $1.26 billion analysts expected. Even more impressive, earnings per share came in at $1.73, up 253% from a year ago.
The company also announced plans to sell its mobile gaming business for $900 million, allowing it to focus entirely on its AI-driven advertising platform. CEO Adam Foroughi said this will make AppLovin a pure advertising platform company, a move that investors clearly loved.
This is a company executing perfectly at the right time, taking full advantage of AI-driven advertising demand.
The Hottest AI Stock, But Is It Overbought?
There’s no doubt that AppLovin is the single strongest AI stock in the market right now. The company’s ad technology, powered by its AXON AI platform, is seeing insane adoption. Software revenue alone grew 73% year-over-year, and with the company expanding beyond mobile into e-commerce and connected TV advertising, there’s even more room to run.
But here’s the problem: the stock has now run up over 900% since early 2024. It’s up 34% in just the last three months. And after this latest post-earnings spike, it’s sitting well into the overbought zone.
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This is what I always warn traders about when chasing big moves. It’s great if you’re already in, but if you’re looking to enter now, you need to be smart about timing. Stocks don’t go straight up forever, and even the strongest ones experience pullbacks.
Wall Street Analysts Are Raising Targets, But Be Careful
At least nine firms raised their price targets on APP after earnings, with Wedbush now calling for 620. Morgan Stanley and Goldman Sachs also hiked their targets, citing AppLovin’s AI ad technology and its potential to expand into new markets.
But remember, analysts tend to chase price action. They weren’t calling for $620 when the stock was trading under $100 six months ago. Just because they’re bullish now doesn’t mean the stock won’t pull back.
Should You Buy APP Now?
This is still the best AI stock in the market right now. The business fundamentals are incredible, and the company is printing cash with 44% profit margins. But with the stock this extended, traders need to be disciplined.
If you’re already in, it makes sense to hold, but don’t get greedy—know your exit plan. If you’re looking to buy, wait for a pullback or consolidation. Stocks that go parabolic like this usually give better entries after some cooling off.
It’s easy to look at APP’s growth curve and think that it’s “going to the moon.” But remember, nothing is guaranteed in the market, and most traders lose.
That’s why I focus on lower-priced stocks, and disciplined trading plans.
If you want to know what I’m looking for—check out my free webinar here!
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