.September 11, 2024 04:21:00 PM

AppLovin (NASDAQ:APP) saw a 13% increase in shares today after BofA Securities raised their price target to $120 and maintained a Buy rating. Analysts predict the Software division could grow by over 20% annually through 2026, surpassing the mobile gaming market’s 5% to 10% growth. AppLovin is positioned to capture a majority of new in-app purchase revenue despite only capturing a third of projected ad spend in 2024.

BofA analysts emphasized the challenge of matching mobile gamers with the right games in the mobile advertising space. Currently, mobile ad networks convert around three installs per 1,000 impressions, but even a small improvement to five installs could drive significant industry growth.

AppLovin’s AI Engine has boosted install rates by 112% since Q1 2023. The company’s use of large language models for data collection presents further growth opportunities by enhancing matching efficiency in the long term.