Applovin's (APP.US) advertising business performance is outstanding, with Morgan Stanley and UBS Group AG both raising their target prices.

Applovin (APP.US) had a strong performance in the first quarter, with significant growth in both its core game advertising business and non-gaming business. Several Wall Street investment banks have raised their target price for the company. The financial report shows that the company's Q1 revenue was $1.48 billion, a 40% year-on-year increase, exceeding market expectations; adjusted earnings per share were $1.67, also surpassing market expectations. AppLovin has agreed to sell its mobile gaming division to London's Tripledot Studios in order to focus on its advertising technology business. As Applovin further invests in core technology and expands into new areas (such as CTV), Morgan Stanley is optimistic about its future growth, maintaining its "overweight" rating and raising its target price from $350 to $420. Morgan Stanley is more optimistic about Applovin's execution in core advertising products after the end of the first quarter, as it continues to expand its market share in the gaming sector, while non-gaming products also have growth momentum. The bank estimates that non-gaming products contributed approximately $150 million in revenue in the just-ended second quarter (compared to an estimated $750 million for the full year 2025). Morgan Stanley is more optimistic about the company's opportunities to further expand market share in the future, hence it has raised its EBITDA expectations for 2025 and 2026 by 18%. UBS Group AG also sees profit growth for Applovin and maintains a "buy" rating with a target price raised from $450 to $475. Looking ahead, UBS Group AG has raised its EBITDA expectations for Applovin's 2026 fiscal year by 7.4% to $6.1 billion, reflecting faster delivery of network advertising revenue growth (expected to increase from $348 million to $1.65 billion), as the launch of the self-service advertising platform has been faster than expected. UBS Group AG points out that a faster transition to self-service does not automatically result in sustained revenue growth acceleration, but the recognition of "trying an exclusive positioning", even if it may be premature in the early stages of the product lifecycle, demonstrates a willingness to meet the needs of advertisers. This should help further stimulate new advertiser demand.