Wedbush recently maintained an “Outperform” rating on AppLovin (APP) stock, keeping its price target of $640. Led by Alicia Reese, Wedbush analysts recently had a call with the company’s management team to dig into its e-commerce push and tech road map.
What the analysts heard left them bullish on APP stock. Let’s take a closer look.
Most people know AppLovin as a mobile gaming ad company. But that description is quickly becoming outdated as the company expands into an artificial intelligence (AI) marketing platform that goes well beyond gaming.
For one, AppLovin is rapidly scaling its e-commerce self-service platform. Paired with that is the upcoming rollout of new generative AI-powered advertising tools, including 30- to 60-second AI video ads and dynamic product catalogs.
“As they move toward general availability of the e-commerce product, highlighted by the upcoming launch of 30-60s AI video ads and dynamic product catalogs, AppLovin is positioned to capture a massive TAM expansion,” noted Reese and analysts.
AppLovin’s core gaming ad business is already a growth driver. The company expects that business to sustain 20% to 30% baseline growth annually. But e-commerce is a market that AppLovin CEO Adam Foroughi has described as potentially five to 10 times bigger than gaming.
To understand why Wall Street is excited, consider AppLovin’s fourth-quarter and full-year 2025 earnings results. AppLovin reported full-year revenue of $5.48 billion, up 70% year-over-year (YOY). Adjusted EBITDA came in at $4.51 billion, with an 82% EBITDA margin. Free cash flow stood at $3.95 billion, up almost 91% YOY.
Wedbush believes that a combination of hyper-growth and massive cash generation puts AppLovin in a category of its own.
One of the biggest concerns investors have raised is competition. Meta Platforms (META) is both a partner and a rival, while Alphabet (GOOGL) and others compete in the same auction-based ad environment.
Wedbush addressed this head-on. The firm said that in “probabilistic” bidding environments — meaning ad auctions where user identity data is limited — AppLovin dominates. That edge comes from its Axon 2.0 AI model built specifically for the mobile gaming niche.
