We recently published a list of 10 Hottest Mega-Cap Stocks of 2025. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other hottest mega-cap stocks of 2025.
In 2024, companies poured money into Artificial Intelligence infrastructure in a bid to outpace each other in the AI race. The communication services and information technology sectors led the the large-cap stocks in terms of returns. AI-driven hype was so significant that for the first time since 1998, the S&P’s large-cap index registered two consecutive years of 20%+ gains.
2025 may well be the year of reckoning for AI. Some analysts have questioned the massive AI spending throughout the last year. Their concerns and predictions were dealt a reality check though when Bill Gates’ tech giant announced it planned to spend $80 billion on AI in fiscal 2025. Consequently, semiconductor stocks rallied, reminding everyone that the AI rally wasn’t over by any means.
Not surprisingly, the list is dominated by chipmakers, who we believe will be critical to the market’s returns this year. To come up with the 10 hottest mega-cap stocks of 2025, we considered stocks with at least $75 billion market capitalization.
A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.
AppLovin Corporation (NASDAQ:APP)
AppLovin Corporation (NASDAQ:APP) stock continues to surge this year. After amassing 800% returns in 2024, one would think the stock was done rallying. However, it only seems to have paused for a month and is now gaining attention again. The stock is up over 10% this year.
AppLovin (NASDAQ:APP) helps developers manage their development and marketing tasks with ease. The company’s AXON AI engine helps increase the chances of app installs. This AI engine helps drive the success of the comprehensive suite of tools that the company offers to developers to help them expand their reach globally.
The company’s stock narrowly missed inclusion in the S&P 500 in December. However, considering the fact that it is actually using AI to benefit its customers, resulting in revenue, chances are that the strong fundamentals will continue to drive the stock up. The S&P 500 inclusion will therefore be a matter of when, not if. Investors will have their eyes on the next quarterly rebalancing.
The stock will also be driven by the growth of both in-app advertising and in-app purchases. The success of the company this year depends on the development of its AXON AI engine. If that continues to improve as AI technologies get better, the firm should be able to continue generating increasing revenue with ease.
Overall, APP ranks 2nd on our list of hottest mega-cap stocks of 2025. While we acknowledge the potential of APP as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as APP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.