Morgan Stanley has raised its price target for AppLovin Corporation (APP) to $125, citing strong momentum from AI-integrated advertising technology. The upgrade reflects growing confidence in the company’s ability to leverage artificial intelligence to enhance ad performance and drive revenue growth.
- Morgan Stanley raised its price target for AppLovin (APP) to $125
- APP’s AI-driven services contributed 41% of Q4 2025 platform revenue
- Average revenue per user (ARPU) increased 32% YoY in Q4 2025
- AI tools are projected to reduce ad production costs by up to 40%
- APP shares rose 5.8% in after-hours trading following the upgrade
- Morgan Stanley upgraded APP to 'Overweight' rating
Morgan Stanley has upgraded AppLovin Corporation (APP) to an 'Overweight' rating and raised its price target to $125, marking a significant increase from its previous estimate. The firm attributes the positive outlook to AppLovin’s expanding use of artificial intelligence across its ad tech platform, which is enabling more precise user targeting, higher conversion rates, and improved return on ad spend for publishers and advertisers alike. The AI-led growth thesis centers on AppLovin’s AI-powered demand-side platform and its proprietary machine learning models that optimize ad delivery in real time. These capabilities are increasingly critical in the digital advertising sector, where efficiency and personalization are key differentiators. Morgan Stanley notes that AppLovin’s AI-driven tools have contributed to a 32% year-over-year increase in average revenue per user (ARPU) in Q4 2025, underscoring the monetization power of its technology stack. The firm also highlights AppLovin’s strategic expansion into generative AI applications for creative asset generation, which are expected to reduce ad production costs by up to 40% while increasing engagement. This innovation is positioned to further strengthen AppLovin’s competitive edge in a market increasingly defined by AI integration. The company reported $385 million in revenue for Q4 2025, with AI-related services accounting for 41% of total platform revenue—up from 26% in the same quarter the prior year. The upgrade has triggered immediate market reaction, with APP shares rising 5.8% in after-hours trading. Investors and analysts are closely watching the company’s ability to scale AI capabilities while maintaining profitability. The move also reflects broader institutional confidence in AI-enabled platforms within the technology and digital advertising sectors.