AppLovin rockets higher after crushing Wall Street estimates

Ad tech firm AppLovin is mooning after releasing robust quarterly results after the close on Wednesday, with shares up nearly 30% premarket.

The company reported adjusted earnings per share of $1.73 on revenues of $1.37 billion, crushing every Wall Street analyst’s estimate. Its core business, advertising, came just shy of cracking $1 billion in sales for the quarter.

And based on its guidance, that bar may be cleared in the current quarter, with management seeing total revenues between $1.36 billion to $1.39 billion, versus the consensus estimate for $1.32 billion. Wall Street is looking for AppLovin’s advertising unit to surpass that milestone.

“Early adopters in gaming and direct-to-consumer commerce have already seen the impact of our technology, and our mission is clear: to onboard every business that wants to drive measurable growth,” CEO Adam Foroughi wrote in a letter to shareholders.

AppLovin has had two major revenue sources: helping developers monetize their apps through advertisements (enhanced with AI tools) and mobile gaming. Management announced that the latter unit is being sold for $900 million.

It’s in a bucket of companies that we’ve previously referred to as successfully “doing AI on the cheap” — a group that saw a spurt of outperformance following the US election and has seemingly benefited from the emergence of China’s DeepSeek AI, as well.

Numbers like these leave me with one big question: What does it mean for the “AI enablers” (or, if you prefer, “hyperscalers”) that a company doing AI on the cheap, with a core business that shares some degree of overlap with Meta and Alphabet, can crush Wall Street’s estimates by this much?