Applovin Shares Maintain Meteoric Rise Amid Strong Fundamentals

Applovin US03831W1080

The equity of software firm Applovin continues its extraordinary ascent in 2025, establishing itself as one of the technology sector's standout performers. Year-to-date gains approaching 88% have captured investor attention, prompting analysis of whether the surge is built on sustainable foundations. Fresh commentary from Citigroup provides further fuel for the bullish case, suggesting significant upside remains even from current elevated valuations.

The share price rally, which propelled the stock to a new 52-week peak of 625.40 euros yesterday, is supported by formidable quarterly results. For Q3 2025, Applovin reported a 68% year-over-year revenue increase to $1.41 billion. More critically for institutional investors, profitability metrics soared. The company's adjusted EBITDA margin expanded to an industry-leading 82%, while net income doubled to $836 million.

These figures validate a strategic pivot executed by management. The divestiture of its gaming division for $400 million in May 2025 allowed the company to focus exclusively on its high-margin software-as-a-service (SaaS) and AI-driven advertising operations.

Analyst Endorsement Highlights Growth Drivers

In a research note dated December 23, 2025, Citigroup analyst Jason Bazinet reaffirmed a "Buy" rating on the tech stock, establishing a price target of $820 per share. This projection indicates substantial potential growth from present trading levels.

The bank's optimistic stance is primarily driven by the accelerating adoption of Applovin's AXON platform among e-commerce clients, particularly within the Shopify ecosystem. Analysts note that despite recent expansion, overall market penetration remains low, pointing to a long runway for further growth. The company is also successfully diversifying its client base internationally, reducing its previous reliance on U.S.-based merchants.

A key factor in the bullish assessment is operational efficiency. Applovin is achieving this rapid growth without a corresponding explosion in marketing expenditure, highlighting the scalable nature of its AI-powered business model.

Elevated Expectations and Long-Term Ambitions

Applovin's inclusion in the S&P 500 index in September cemented its status as a major technology player. For the ongoing fourth quarter, management has provided revenue guidance of up to $1.6 billion. Looking further ahead, the company has set an ambitious long-term target of reaching $10.5 billion in annual revenue by 2028, a goal it expects to achieve through the continued development of its AI engine, AXON 2.0.

Investors are paying a premium for this projected growth. With an estimated forward price-to-earnings ratio of approximately 47 for 2026, expectations are already lofty. The prevailing analyst consensus remains largely positive, however. The rationale is that Applovin is effectively targeting the vast $170 billion e-commerce advertising market, and its current operational momentum is seen as justifying the rich valuation.