Needham's Bernie McTernan on if AppLovin can maintain its momentum

Market Trends & Expansion - AppLovin is expanding beyond apps into the broader web and AI, aiming to become a key player in digital and AI, potentially like the "Nielsen" of the digital world [1] - The e-commerce sector, referred to as the "open web," is expected to contribute significantly to AppLovin's revenue, with consensus estimates around $16 billion [1] - Mobile gaming is seen as a major beneficiary of AI, with improvements in games expected to drive increased consumer engagement and spending [4] - AppLovin is undergoing a substantial Total Addressable Market (TAM) expansion by venturing into e-commerce [8] Competitive Landscape & Strategy - AppLovin's self-service platform, launched on October 1st, aims to emulate the success of platforms like Meta or Google for the web era [3] - AppLovin's Axon 2.0, utilizing neural networks, is designed to enhance advertising effectiveness [5] - AppLovin focused on rolling out Axon 2.0, allowing them to explode in growth, reaching approximately $15 billion in gross advertising spend, nearly half of the mobile gaming market [7] - Unity missed a product cycle, while AppLovin focused on Axon 2.0, leading to a disparity in market capitalization [7] Investment & Valuation - Mobile gaming stocks, including AppLovin, Roblox, and Unity, are considered expensive but justified due to their potential as major beneficiaries of current market trends [5] - AppLovin's valuation is supported by expectations of strong growth in e-commerce and the potential of its AI-driven advertising solutions [1][5]