Why Wedbush Analysts Love AppLovin Stock Right Now

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.

Wedbush Is Optimistic About AppLovin's E-Commerce Push 

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 But that description is quickly becoming outdated as the company expands into an artificial intelligence (AI) marketing platform that goes well beyond gaming.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.

AppLovin's AI model Is the Real Moat 

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.

Foroughi explained the depth of the problem that Axon is solving at the Morgan Stanley Technology, Media & Telecom Conference this month. The model doesn't just place a single ad. It predicts a sequence of outcomes, whether the user will engage, download, keep using, and eventually spend money, all the way out 28 days into the future.

"You can't get any of the sequence of predictions wrong to deliver the value that you're trying to deliver for the advertiser," Foroughi said.

Wedbush noted that other major competitors lack AppLovin's buying tools, meaning lower lifetime value (LTV) for advertisers.

A Focus on Stock Buybacks 

For investors who want to know what AppLovin is doing with all that cash, Wedbush laid it out clearly. The company repurchased $2.58 billion worth of shares in 2025, and still has roughly $3.28 billion remaining on its buyback authorization.

With APP stock undervalued in its view, Wedbush believes buybacks will remain the top priority. The firm expects AppLovin to “reinvest to drive organic growth primarily within its e-commerce initiative, while sparingly evaluating M&A opportunities.”

What Is the Price Target for APP Stock?

In the last two years, APP stock has returned 640% for shareholders. Out of the 27 analysts covering AppLovin, 20 recommend a “Strong Buy” rating, three recommend a “Moderate Buy,” and four recommend a “Hold” rating.

The highest target for APP is $860, pointing to potential upside of 91%, while the lowest target of $340 suggest possible downside of 25%. Meanwhile, the average price target of $671.36 implies potential upside of about 49% from current levels.