Applovin Soars to $352 as AI Ad Models Drive an 84% EBITDA Margin and $1.4B Buyback — Buy Above $341

AppLovin delivered the single most violent reversal in large-cap tech on Thursday, November 5. Shares of NASDAQ:APP traded at $352.46 at 2:29 p.m. ET, up $80.71, or 29.70%, from Wednesday’s close of $271.75. The stock printed an intraday high of $363.39, a gain of 33.7%, and held most of that move through the afternoon. Market capitalization climbed to $117.95 billion from roughly $91 billion at Wednesday’s close, adding nearly $27 billion in a single session.

The context makes the move extraordinary. AppLovin entered its earnings report as the worst-performing stock in the S&P 500 for 2026, down 59.67% year to date. Even after Thursday’s surge, the stock remains down roughly 49% for the year and sits 52% below its 52-week high of $738.01. The 52-week low of $225.19 came just weeks ago. At $352.46, AppLovin trades 56.5% above that low.

The tape around it was brutal. On the same session, the Nasdaq Composite fell 4.3% into correction, the S&P 500 dropped 3.14% and the PHLX Semiconductor Index collapsed 11%, its worst day since March 2020. The Nasdaq-100 fell as much as 6% at its lows. AppLovin hit three-month highs while the index it belongs to was having one of its worst days in years. On a session when $2 trillion in chip and AI market value evaporated, AppLovin added more value than most companies are worth.

The stock had already started moving before earnings. AppLovin rose 10.69% in Wednesday’s regular session as it bounced off its 52-week low. Then the results hit after the close and the stock jumped 22.83% in after-hours trading to $333.80. Thursday’s regular session added another leg.

The thesis for this forecast is direct. AppLovin is an AI company that the market had priced like a broken one. The stock fell nearly 60% this year on fears that its growth was slowing, its e-commerce expansion was stalling and a securities class action would expose problems with its AI models. Thursday’s numbers answered most of those fears. Revenue grew 55% to $2.18 billion, beating the high end of guidance by $100 million. Adjusted EBITDA margins expanded to 84%. Free cash flow hit $1.42 billion. Fourth-quarter revenue guidance of $2.365 billion to $2.395 billion beat the $2.25 billion consensus by 5%. And management bought back $1.4 billion of stock at an average of $341 because it saw a dislocation between price and intrinsic value. At 16.8 times 2026 adjusted EBITDA, AppLovin still trades well below what its growth and margins justify. The $440 level is the first target.

The Session: From $271.75 to $363.39 in 17 Hours

The move unfolded in three stages. The first came in Wednesday’s regular session, before earnings. AppLovin rose 10.69% as investors positioned ahead of the report. The stock had bounced off its 52-week low earlier in the week after falling 19% in under two weeks during a nine-session losing streak. Short sellers and longs both braced for another volatile print.

The second stage came after the bell. AppLovin released results after the close on November 4, and the stock jumped 22.83% to $333.80 in thin after-hours trading. By Thursday’s premarket session it was up roughly 23%, and overnight trading showed gains near 20%. The after-hours move reflected the scale of the beat, but extended-hours liquidity is thin, and many traders waited for the regular session to confirm.

The third stage came at the open. AppLovin extended its gains through the morning, reaching $347.73, up about 28%, by 1:14 p.m. ET. At 11:34 a.m. ET it traded at $348.31, up 28.61%. The stock pushed to its intraday high of $363.39, up $91.64 or 33.7%, before settling back to the low $350s. By 2:29 p.m. ET it stood at $352.46.

What makes the session remarkable is the backdrop. Every time the Nasdaq made a new low, AppLovin held its gains. The S&P 500 fell 3.2% during the session, and the semiconductor index dropped 11%. AI infrastructure names like CoreWeave, Nebius and Dell fell 10% to 20%. AppLovin, whose business runs on AI models, moved in the opposite direction.

The difference lies in what kind of AI exposure each company carries. Chip and data-center stocks fell on fears that Democratic wins in Texas, Ohio and Georgia would slow construction of new AI infrastructure. AppLovin does not build data centers. It uses AI to sell advertising. Its margins depend on model performance, not on new power plants or permitting. On a day when the market punished AI capital spending, it rewarded AI monetization.

The move also reversed a painful pattern. AppLovin fell 20.02% after its second-quarter 2026 report and 22.42% after its fourth-quarter 2025 report. Investors who had been burned twice by post-earnings collapses were caught short on the third.

The Quarter: Revenue Up 55% to $2.18 Billion, $100 Million Above the High End

AppLovin’s third quarter crushed every benchmark. Revenue rose 55% year over year to a record $2.18 billion. The consensus estimate stood at $2.07 billion, so AppLovin beat by $110 million, or 5.3%. Revenue rose 14% from the second quarter, the largest sequential dollar increase in the company’s history at well over $200 million. AppLovin exceeded the high end of its own guidance by roughly $100 million.

Earnings were equally strong. Diluted earnings per share came in at $4.30, up from $2.45 in the third quarter of 2025, a gain of 75.5%. The consensus estimate sat at $4.03 to $4.04, so AppLovin beat by roughly 6.6%. Basic EPS was $4.31. Net income rose 72% to $1.44 billion.

The drivers were clear. CFO Matt Stumpf said the revenue beat came primarily from the core mobile gaming business, driven by model improvements during the quarter, with continued scaling in the consumer vertical. CEO Adam Foroughi said AppLovin partially rolled out a new generation of models during the quarter, helping advertisers deploy more spending profitably against their target returns. Gaming revenue reaccelerated to roughly 50% growth.

The comparison with the rest of digital advertising is striking. Management noted that the largest platforms in digital advertising reported third-quarter revenue growth between roughly 10% and the mid-20s percent this earnings season. AppLovin grew 55%, more than double the best of its large-cap peers. On the same morning, Snap fell 12% after missing third-quarter revenue estimates.

The nine-month numbers show the consistency. Adjusted EBITDA for the first nine months of 2026 reached $5.013 billion, up 61% from $3.114 billion a year earlier. Trailing 12-month revenue now stands at $6.83 billion, up 60.6%.

The scale of the beat matters because it came from the core business. Investors had worried that AppLovin’s gaming business was maturing and that the company depended on e-commerce to keep growing. Thursday’s report showed gaming reaccelerating on better models while e-commerce kept scaling. Two growth engines are firing at once.

The quarter also put to rest fears about the model transition. AppLovin has been rolling out new AI architecture, and some investors worried the transition would disrupt results. Instead, the partial rollout drove the beat, and the full rollout is still ahead.

Profitability: An 84% EBITDA Margin and a 66% Net Margin

AppLovin’s margins are almost unheard of for a company of its size. Adjusted EBITDA rose 59% to $1.842 billion, up from $1.158 billion a year earlier. The adjusted EBITDA margin reached 84%, up roughly 190 basis points from 82% a year ago. Net income margin hit 66%. Both figures are, by management’s description, industry-leading.

To put that in perspective, an 84% EBITDA margin means that for every dollar of revenue AppLovin collects, 84 cents becomes operating profit before depreciation, interest and taxes. Most large technology companies operate at EBITDA margins between 30% and 50%. Even the most profitable digital advertising platforms rarely exceed 60%.

The incremental margins are even higher. Quarter-over-quarter flow-through to adjusted EBITDA reached 87%. That means 87 cents of every additional revenue dollar from the second quarter to the third quarter fell straight to EBITDA. That kind of operating leverage reflects an asset-light business where costs barely rise as revenue grows.

Management manages to dollars, not percentages. Stumpf said AppLovin runs the business to EBITDA dollars and free cash flow rather than to a margin percentage, and will continue to deploy dollars when it sees an opportunity to produce more revenue. The company is investing in computing capacity to train its models, which could compress margins slightly in coming quarters without hurting dollar profit growth.

The margin structure explains the stock’s sensitivity to growth. When revenue grows 55% and 87% of incremental revenue becomes EBITDA, earnings compound rapidly. When growth slows, the stock falls hard because investors price the multiple off growth. That dynamic produced the 20% post-earnings drops after the last two reports and the 30% surge on Thursday.

Margins also highlight the quality of the business. AppLovin sold its Apps business in 2025, sharpening its focus on its core advertising platform. Without the lower-margin apps segment, the company is a pure-play advertising technology business with software-like economics.

For the forecast, margins are a key strength. An 84% EBITDA margin gives AppLovin the cash to fund aggressive buybacks, invest in computing and absorb competitive pressure while still compounding earnings.

Cash and Buybacks: $1.42 Billion in Free Cash Flow, $1.4 Billion Returned

AppLovin converted its profits into cash. Free cash flow reached $1.418 billion in the third quarter, up from $1.049 billion a year earlier. That equaled 77% of adjusted EBITDA, up from 53% in the second quarter, and roughly 65% of total revenue. Stumpf said second-quarter conversion was depressed by the timing of cash tax payments. Management still expects full-year free cash flow conversion of roughly 70% to 75% of adjusted EBITDA.

The second quarter showed $869.0 million in operating cash flow and $863.3 million in free cash flow. The third quarter’s $1.418 billion represents a 64% sequential increase.

The balance sheet is clean. AppLovin ended the quarter with $3.17 billion in cash and equivalents against $3.52 billion in long-term debt. That puts net leverage below 0.1 times adjusted EBITDA, well below the roughly 1 times net leverage management says it expects to operate at over the long term. Cash rose by $686.6 million during the period. Cash paid for interest was $100.8 million.

Buybacks accelerated. AppLovin repurchased and withheld 4.1 million shares of Class A common stock for a total cost of $1.4 billion in the third quarter, up from 1.1 million shares for $551.3 million in the second quarter. The average price works out to roughly $341 per share. The diluted share count fell for the eighth consecutive quarter. Shares outstanding stand at about 331 million.

Management explained the step-up. Stumpf said the company opportunistically ramped up the buyback because it saw a dislocation in the stock price versus the intrinsic value of the company. That is a direct statement that management believed the stock was undervalued in the $300s.

The board added firepower. AppLovin increased its repurchase authorization by $3.2 billion, bringing the total current authorization to $3.6 billion as of the end of October. Since the program began, AppLovin has returned $9.4 billion through repurchases and withholdings, representing 85% of total free cash flow over that period. The program has retired 104 million shares at an average cost of roughly $90.

For the forecast, the buyback creates a structural bid. A $3.6 billion authorization equals about 3% of the current market cap. Management bought at $341 and said the stock was cheap. Thursday’s price of $352 sits just above that level, suggesting continued buying is likely on any pullback.

Q4 Guidance: $2.365 Billion to $2.395 Billion, 5% Above Consensus

The guidance drove the stock more than the quarter. AppLovin forecast fourth-quarter revenue of $2.365 billion to $2.395 billion, implying growth of roughly 43% to 44% year over year. The consensus estimate sat near $2.25 billion. At the midpoint of $2.38 billion, AppLovin’s guide beat expectations by $130 million, or 5.8%.

EBITDA guidance was equally strong. AppLovin expects fourth-quarter adjusted EBITDA between $1.995 billion and $2.025 billion, representing growth of roughly 43% to 45%. At the midpoint of $2.01 billion, that implies an EBITDA margin near 84%, consistent with the third quarter.

The full-year picture is now clear. Combining nine-month adjusted EBITDA of $5.013 billion with the fourth-quarter midpoint gives 2026 adjusted EBITDA of roughly $7.02 billion, up from $4.5 billion in 2025, a gain of 56%. Revenue for 2026 would reach roughly $8.4 billion if fourth-quarter results land at the midpoint, compared with $5.5 billion in 2025.

The guidance includes seasonal tailwinds. The outlook reflects seasonal strength in e-commerce advertising heading into the holiday shopping season, as well as ongoing investment in computing capacity. The fourth quarter is historically AppLovin’s strongest for consumer advertisers.

Growth is decelerating but from a high base. Third-quarter growth of 55% moves to 43% to 44% in the fourth quarter. That deceleration reflects tougher comparisons with last year’s strong fourth quarter. Foroughi reiterated management’s belief that AppLovin can grow at roughly 30% annually over the long term, while cautioning that model improvements and customer growth are difficult to predict quarter to quarter.

The guide matters because it answered the main bear argument. After the second-quarter report, AppLovin fell 20% as investors worried growth was slowing faster than expected. A fourth-quarter guide 5% above consensus, with growth still above 40%, shows the slowdown fear was premature. The market had priced growth falling toward 20%, and AppLovin is guiding to double that.

For the forecast, the guidance resets expectations higher. Analysts will raise 2027 estimates, and the stock’s multiple on forward earnings will compress mechanically. That supports further upside as the market reprices the growth trajectory.

The Model Rollout: New Architecture, Partially Deployed

AppLovin’s growth engine is its AI recommendation system, called Axon. The company has been rolling out a new generation of models built on a new architecture that allows for larger-scale training and better performance with sparse data. Foroughi said the new models were partially rolled out during the third quarter, helping advertisers deploy more spending profitably against their target returns.

The partial rollout drove the beat. Revenue exceeded guidance by $100 million primarily because of the core mobile gaming business and model improvements, according to Stumpf. Gaming revenue reaccelerated to roughly 50% growth. That reacceleration came from better ad targeting, which lets game publishers spend more on user acquisition while still hitting their return targets.

The architecture matters for smaller advertisers. The new models perform better with sparse data, which means they can optimize campaigns for advertisers who have limited historical data on the platform. That is particularly useful for newer and smaller advertisers in the consumer vertical, where AppLovin is still building its customer base. Better performance for new customers means faster ramp-up and higher retention.

The full rollout is still ahead. Management described the third-quarter deployment as partial. As the new models roll out across the full platform, the performance gains should expand. That creates a built-in growth catalyst for the fourth quarter and into 2027.

There are risks in the transition. Model changes can disrupt campaigns, and advertisers may see volatile results during rollouts. Management cautioned that model improvements are difficult to predict from quarter to quarter. A poorly received model update could slow growth and hit the stock hard.

The models also face legal scrutiny. A securities class action alleges AppLovin misled markets about its AI model improvements. The Kaplan Fox law firm has encouraged investors to contact it before a November 16, 2026 deadline. The lawsuit does not change the financial results, but it adds headline risk.

Investment in computing continues. AppLovin is investing in computing capacity to train larger models. That spending is modest relative to the company’s cash flow but represents a cost that could grow as models scale.

For the forecast, the model rollout is the core growth driver. Partial deployment produced a 14% sequential revenue gain. Full deployment could sustain growth above 40% into 2027 if the performance improvements hold.

Beyond Gaming: E-Commerce Spend Up Triple Digits, Self-Serve and Referrals Expand

AppLovin’s second growth engine is the consumer vertical, which includes e-commerce and other non-gaming advertisers. Consumer advertisers’ spend grew double digits quarter over quarter and triple digits year over year. That growth continues to scale, though from a smaller base than gaming.

The opportunity is large. AppLovin already works with most mobile gaming companies, so new customer acquisition in gaming is limited. In the consumer vertical, penetration remains low. Every e-commerce brand, direct-to-consumer company and retailer is a potential advertiser. Management sees new customer acquisition as a central growth opportunity.

The self-serve platform opened the door. AppLovin launched its rebranded Axon Ads Manager in 2025 and opened its ad platform to self-serve advertisers earlier in 2026, widening the pool of buyers beyond large gaming publishers. Self-serve lets advertisers sign up, upload creative and launch campaigns without working directly with AppLovin’s sales team.

Success depends on sophistication. Foroughi said customers who go through AppLovin’s team have a much higher likelihood of success than those using the self-service channel on their own. Sophisticated self-service advertisers can succeed, but very small businesses are not yet the platform’s primary opportunity. Customers often validate results through incrementality studies before raising budgets substantially.

Referrals and partnerships are scaling. AppLovin is expanding a referral program and partnerships to accelerate customer acquisition. Foroughi described the partnership efforts as a work in progress with a multi-year trajectory. He said the rate of new customers is accelerating, which will compound over time as more advertisers run campaigns, conduct studies and scale their spend.

Acquisitions are on the table. Foroughi said AppLovin would consider acquiring data or customer relationships if a transaction could bring customers onto its platform more quickly.

Connected television is a longer-term option. AppLovin has pilot advertising campaigns running on connected TV. Foroughi said the product looks promising but is early and should not be expected to contribute meaningfully to results soon.

The challenges are real. The consumer vertical is still early in its development, with many advertisers requiring hand-holding, leading to slow ramp-up and potential churn. Some advertisers are preemptively shifting budgets to competitors due to concerns about rising auction prices and return compression.

For the forecast, the consumer vertical is the key to AppLovin’s long-term growth. Triple-digit year-over-year growth shows traction, but it will take multiple quarters for e-commerce to match gaming’s scale.

The Risks: A Class Action, Competition and a History of Post-Earnings Collapses

AppLovin’s surge does not erase its risks. The first is legal. A securities class action alleges AppLovin misled markets about its AI model improvements. Law firms have encouraged investors to come forward before a November 16, 2026 deadline to seek lead plaintiff status. Class actions rarely change a company’s fundamentals, but they generate headlines, create legal costs and can prompt regulatory scrutiny.

The second is competition. Digital advertising is dominated by large platforms with massive user bases and data. Some advertisers are preemptively shifting budgets to competitors over concerns about rising auction prices and return compression. As AppLovin attracts more advertisers to its auctions, prices rise, which can squeeze advertiser returns and push them to try other platforms. Management said it has never been the case that other companies growing should squeeze AppLovin, but the risk exists.

The third is volatility. AppLovin carries a beta of 3.32, meaning it moves more than three times as much as the broader market on average. The stock fell 20.02% after its second-quarter 2026 report and 22.42% after its fourth-quarter 2025 report. It fell 19.68% on a single day in February. A stock that can drop 20% on a guidance miss can also give back Thursday’s gain quickly if sentiment shifts.

The fourth is insider selling. Recent insider sales have weighed on sentiment. Insider selling does not necessarily signal problems, since executives sell for many reasons, but it adds to the narrative of uncertainty.

The fifth is concentration. Despite consumer growth, gaming still drives the majority of revenue. AppLovin’s fortunes depend heavily on mobile game publishers’ marketing budgets, which can swing with app store policy changes, privacy rules and gaming industry cycles.

The sixth is regulation. A Democratic Congress elected Tuesday is expected to push for tighter oversight of technology companies, including data privacy rules that could affect ad targeting. AppLovin’s models rely on data to optimize campaigns, and stricter privacy rules could reduce their effectiveness.

The seventh is the model transition itself. Management cautioned that model improvements are difficult to predict. If the full rollout underperforms the partial rollout, growth could slow.

For the forecast, the risks argue for position sizing discipline. AppLovin’s fundamentals support a higher price, but its volatility means investors should expect sharp swings in both directions.

Valuation: 16.8 Times 2026 EBITDA After a 30% Jump

AppLovin remains cheap relative to its growth. At $352.46, the market capitalization stands at $117.95 billion. Adding $3.52 billion in long-term debt and subtracting $3.17 billion in cash gives an enterprise value of roughly $118.3 billion. Against estimated 2026 adjusted EBITDA of $7.02 billion, AppLovin trades at 16.8 times EBITDA.

That multiple is modest for a company growing EBITDA 56% this year with 84% margins. Large-cap software and advertising technology companies with slower growth often trade at 20 to 30 times EBITDA. AppLovin’s multiple reflects the market’s skepticism about sustainability, not its current performance.

Earnings multiples tell a similar story. Third-quarter diluted EPS of $4.30, annualized, implies a run rate of $17.20 per share. At $352.46, that equals 20.5 times run-rate earnings. Fourth-quarter guidance implies further EPS growth.

Price-to-sales is higher. With trailing 12-month revenue of $6.83 billion, AppLovin trades at 17.3 times sales. That looks expensive on the surface, but with 84% EBITDA margins and 66% net margins, sales multiples overstate the valuation. A dollar of AppLovin revenue produces far more profit than a dollar of revenue at most companies.

Free cash flow yield is attractive. Applying management’s 70% to 75% conversion target to 2026 EBITDA of $7.02 billion gives 2026 free cash flow of roughly $4.9 billion to $5.3 billion. Against a $117.95 billion market cap, that equals a free cash flow yield of 4.2% to 4.5%.

The stock remains far below its peak. AppLovin traded at $738.01 at its 52-week high. Even after Thursday’s rally, the stock sits 52% below that level. At the peak, the market cap exceeded $240 billion. EBITDA has grown since then, which means the multiple has compressed sharply.

The buyback reinforces the valuation case. Management spent $1.4 billion buying stock at an average of $341, explicitly because it saw a gap between price and intrinsic value. The program has retired 104 million shares at a $90 average since inception.

For the forecast, valuation supports further gains. A re-rating to 20 times 2026 EBITDA, still below many slower-growing peers, would put the stock near $420. A re-rating to 22 times would put it near $460.

Sector Context: The AI Monetization Trade Beats the AI Infrastructure Trade

AppLovin’s surge stands out against one of the worst days for technology stocks in years. The Nasdaq Composite fell 4.3% into correction, more than 10% below its October 6 record. The PHLX Semiconductor Index collapsed 11%. AMD fell as much as 16%, Nvidia 8.3% and Micron up to 16.8%. Data-center operators CoreWeave and Nebius fell 9% to 20%. AI server maker Dell dropped 10.5%.

The selloff targeted AI capital spending. Democratic wins in Texas, Ohio and Georgia raised the odds of moratoriums on data-center construction. States controlled by Democrats who support moratoriums will account for 45% of planned U.S. data-center capacity starting in January. Investors sold companies whose growth depends on building new AI infrastructure.

AppLovin sits on the other side of that trade. It uses AI models to sell advertising, and its growth depends on model performance and advertiser demand, not on new power plants or permits. Its computing needs are modest relative to its revenue. On a day when the market questioned whether AI infrastructure spending would continue, AppLovin showed that AI monetization is already producing enormous profits.

Digital advertising peers had a mixed day. Snap fell 12% after missing third-quarter revenue estimates. The largest digital advertising platforms reported third-quarter revenue growth between 10% and the mid-20s percent, according to AppLovin management. AppLovin’s 55% growth stands alone.

The rotation favored companies with earnings visibility. Toyota rose 9.2% on a profit upgrade and shareholder returns. Energy stocks led the S&P 500 sectors. Investors rewarded companies that delivered strong numbers and penalized those exposed to political risk around AI infrastructure.

AppLovin’s beta cuts both ways. With a beta of 3.32, the stock typically falls harder than the market on down days. Thursday reversed that pattern because company-specific news overwhelmed the macro selloff. If the Nasdaq keeps falling in coming days, AppLovin could give back some of its gain even with strong fundamentals.

For the forecast, AppLovin has become a leader in the shift from AI infrastructure to AI monetization. As long as investors prefer companies that profit from AI over those that build it, AppLovin should benefit.

The Technical Map: A Breakaway Gap From the 52-Week Low

AppLovin’s chart shows a breakaway gap off a bottom. The stock hit its 52-week low of $225.19 within the past several weeks, bounced 10.69% on Wednesday to $271.75 and then gapped higher on earnings. Thursday’s open came near $333.80, the after-hours level, leaving a gap of more than $60 above Wednesday’s close.

Support starts at $341, the average price management paid for its third-quarter buyback. That level acts as a psychological floor, since management explicitly said the stock was undervalued there. Below that, $333.80 marks the after-hours price and the bottom of Thursday’s opening range. The gap zone runs from $271.75 to $333.80. A retreat into the gap would test whether the breakout holds.

The gap is wide. At more than $60, or 23% of Wednesday’s close, it is one of the largest gaps in AppLovin’s history. Wide breakaway gaps often hold because they reflect a fundamental repricing rather than a short-term move. But a partial fill toward $320 would not be unusual in a volatile market.

Resistance starts at $363.39, Thursday’s intraday high. Above that, $400 is the next round-number target. The $440 level marks where AppLovin traded before its most recent decline, a prior support zone that may now act as resistance. Above that, the stock faces overhead supply from buyers who entered between $500 and $738 earlier in the year.

The broader trend is still down. AppLovin fell from $738.01 to $225.19, a 69% drawdown. Thursday’s rally reclaimed roughly 25% of that decline. The stock needs to clear $440 and then $500 to turn the longer-term trend from bearish to neutral.

Volume confirmed the move. The breakaway gap came on heavy volume, a sign of institutional buying rather than a thin squeeze. Short sellers who had bet on another post-earnings collapse were forced to cover, adding fuel.

For traders, the setup is clear. Holding above $341 keeps the breakout intact and targets $400 and $440. A close below $333.80 would signal the gap is filling and target $300.

AppLovin Stock Forecast Verdict: Buy, With $440 as the Target and $341 as the Line

AppLovin’s Thursday session was strongly bullish, and the forecast for the next three to six months leans the same way. NASDAQ:APP at $352.46 is up 29.70% after hitting $363.39 intraday. Market cap rose to $117.95 billion. The stock remains down roughly 49% for 2026 and 52% below its $738.01 high.

The quarter crushed expectations. Revenue rose 55% to $2.18 billion, beating the $2.07 billion consensus and the high end of guidance by $100 million. Diluted EPS of $4.30 beat the $4.03 estimate. Adjusted EBITDA rose 59% to $1.842 billion at an 84% margin. Net income rose 72% to $1.44 billion at a 66% margin. Free cash flow hit $1.418 billion, 77% of EBITDA.

The guidance reset the outlook. Fourth-quarter revenue of $2.365 billion to $2.395 billion beat the $2.25 billion consensus, implying 43% to 44% growth. EBITDA guidance of $1.995 billion to $2.025 billion points to 2026 EBITDA near $7.02 billion. A partial model rollout drove gaming back to roughly 50% growth, and consumer spend grew triple digits year over year.

Management backed the call with cash. AppLovin bought $1.4 billion of stock at an average of $341, citing a dislocation from intrinsic value, and raised its authorization to $3.6 billion. Net leverage sits below 0.1 times EBITDA.

The risks remain. A securities class action alleges AppLovin misled investors about its AI models. Competitors are drawing some advertiser budgets. The stock fell more than 20% after each of its prior two earnings reports and carries a beta of 3.32.

Verdict: Buy. At 16.8 times 2026 EBITDA with 56% EBITDA growth and 84% margins, AppLovin trades at a discount to its earnings power. Buy on pullbacks toward $341, the level management chose for its own buyback. First target $400. Primary target $440, which implies 25% upside. A close below $333.80 would signal the gap is filling and target $300. AppLovin just proved that AI monetization works while AI infrastructure gets sold, and the market has only begun to reprice the difference.

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