AppLovin (APP) is back in the spotlight after a wave of upbeat research updates tied to healthier in-app mobile game advertising trends, AI driven ad tools, and early traction in e-commerce.

See our latest analysis for AppLovin.

That optimism has come after a sharp reset, with AppLovin’s share price delivering a 36.7% decline year to date and a 39.6% 90 day share price return. At the same time, the 1 year total shareholder return is 56.6% and the 3 year total shareholder return is extremely high, suggesting long term holders have still seen very strong gains while shorter term momentum has cooled.

If you like the AI advertising angle but want to see what else is out there, it is worth scanning a curated list of 68 profitable AI stocks that aren't just burning cash for more ideas.

So with AppLovin’s shares down sharply this year, yet still showing strong multi year returns and trading at what some analysts view as a discount to their targets, is this a reset that creates opportunity, or is future growth already priced in?

Most Popular Narrative: 60.4% Undervalued

According to the most followed narrative, AppLovin's fair value is set at $989.24 compared with a last close of $391.49, pointing to a large valuation gap in the eyes of that author.

AppLovin (NASDAQ: APP) posted another stunning quarter, solidifying its position as one of the most profitable AI-powered software platforms in the public markets. For Q3 2025, revenue surged 68% year-over-year to $1.405 billion, while net income nearly doubled to $836 million, up 92%.

Read the complete narrative.

Want to understand why this narrative lifts fair value so far above the current share price? It leans heavily on rapid revenue expansion, very high margins, and a rich future earnings multiple that many investors usually associate with mature software leaders.

Result: Fair Value of $989.24 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this bullish view could be tested if digital ad spending weakens or if privacy and platform rule changes limit the data that powers AXON 2.0.

Find out about the key risks to this AppLovin narrative.

Another View: Market Multiple Sends a Different Signal

The big undervaluation call rests on a rich future earnings multiple of 71.8x, yet the current P/E of 38.5x already sits well above both peers at 30.4x and the wider US software group at 27.8x. The fair ratio sits higher at 53.8x, so is the market being cautious or just early?

For readers weighing what this gap might mean in practice, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

The mix of optimism and caution around AppLovin is clear, so it makes sense to move quickly and test the numbers for yourself using these 3 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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