AppLovin is surging after UBS hikes price target to $540, saying the ad tech firm uses AI for coding more than Google or Meta

AppLovin, the ad tech company that makes everyone think of “Superbad,” is surging on Monday after UBS hiked its price target to $540 from $475. That’s well above the average analyst price target of $467.

Analyst Chris Kuntarich argues that the stock deserves a richer valuation because of its high margins and use of AI to boost efficiency. He now thinks the shares should be at 30x estimated fiscal 2026 EBITDA rather than 28x.

“All in, it’s still underappreciated that APP is ahead of META and GOOG using LLMs to deploy code, while APP’s smaller scale and lean operating philosophy also make the efficiency gains more visible in the P&L,” he wrote.

Thanks to this morning’s 8% gain on the heels of this boost to the price target, shares are up 11% year to date, outpacing the S&P 500’s 5% advance. The Street is extremely bullish on AppLovin, with 22 buy ratings, five holds, and only one sell per analysts polled by Bloomberg.

“Signs of a slower than hoped for quarter-to-date new e-commerce advertiser ramp, another short report, changes to the privacy landscape, and index inclusion/exclusion issues have left investors near term frustrated,” Kuntarich wrote. “However, when investors look out 12-24 months, views remain broadly constructive supported by checks that continue to indicate APP’s performance remains best-in-class for gaming and comparable to META for ecom.”