Bristlemoon Capital, a global equities firm, released its “Bristlemoon Global Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned -6.2% in the December quarter and a 0.3% return in December. Since its inception, the fund has produced a cumulative return of 11.9%, net of fees.  In 2025, market trends intensified, with perceived AI winners rallying, while stocks considered "cheap" dropped even further if labeled as AI losers. In addition, please check the ...

Core Insights - AppLovin has shown impressive growth, with a stock increase of 108% over the past year, following a previous surge of over 700% [2][4] - The company has successfully transitioned from a mobile gaming focus to a pure-play adtech company, enhancing its growth potential and simplifying investor analysis [5] - AppLovin's revenue for the first three quarters of the year reached $3.82 billion, a 72% increase, while GAAP net income rose 128% to $2.23 billion, indicating a profit margin of nearly 60% [6] Company Developments - The sale of AppLovin's mobile gaming business to Tripledot Studios for $400 million in cash and 20% equity was a significant strategic move, aligning the company more closely with its adtech business [5] - The company has expanded into new verticals, including e-commerce, which has contributed to its growth momentum in both gaming and non-gaming sectors [7] - AppLovin's Axon AI advertising technology has been a key differentiator in its performance [7] Market Expectations - Expectations for AppLovin in 2026 are high, driven by the success of its adtech business [8] - Despite a high price-to-earnings ratio of 75, the growth trajectory appears justified, with potential for further stock appreciation as long as the ad market remains robust [9] - The company is experiencing rapid growth in Asia and is diversifying its product offerings, positioning itself well for future success [9]

Core Viewpoint - AppLovin Corporation (NASDAQ:APP) is viewed positively by analysts, with bullish ratings and increased price targets indicating strong growth potential in the gaming and advertising sectors [1][2]. Group 1: Analyst Ratings and Price Targets - BTIG analyst Clark Lampen reiterated a Buy rating for AppLovin, raising the price target from $705 to $771, suggesting a potential upside of 22% [1]. - Benchmark & Co. analyst Mike Hickey also maintained a Buy rating, increasing the target price from $700 to $775, highlighting the stock as a "Best Idea" due to its profitability and growth potential [2]. Group 2: Business Strength and Market Trends - Hickey emphasized the fundamental strength of AppLovin, driven by the rise in e-commerce, effective prospecting campaigns, and the impact of Gen AI on creative processes [3]. - The company is focusing on optimal spending for AI infrastructure and plans for international expansion, which are expected to enhance advertiser density [3]. Group 3: Company Overview and Strategic Shift - AppLovin connects advertisers with publishers through an AI-enabled software platform, providing end-to-end solutions for global content monetization [4]. - The company has shifted its focus towards the adtech space for better margins after divesting its mobile gaming segment [4].

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] Investment Opportunity - A specific company is highlighted as a potential investment opportunity, possessing critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI data centers [3][7] - This company is not a chipmaker or cloud platform but is positioned to benefit significantly from the anticipated surge in electricity demand driven by AI technologies [3][6] Energy Demand and Infrastructure - AI technologies, particularly large language models like ChatGPT, are extremely energy-intensive, with data centers consuming as much energy as small cities [2] - The company in focus owns nuclear energy infrastructure, making it a key player in the future of clean and reliable power in the U.S. [7] Financial Position - The company is noted for being completely debt-free and holding a substantial cash reserve, which is nearly one-third of its market capitalization [8] - It is trading at less than 7 times earnings, indicating a potentially undervalued position in the market [10] Market Trends - The company is positioned to capitalize on the onshoring trend driven by tariffs, as well as the surge in U.S. LNG exports under the current administration's energy policies [5][14] - There is a growing recognition on Wall Street of this company's potential, as it quietly benefits from multiple market tailwinds without the high valuations typical of many energy and utility firms [8][9] Future Outlook - The influx of talent into the AI sector is expected to drive continuous innovation and advancements, reinforcing the importance of investing in AI-related infrastructure [12] - The company is seen as a critical player in the upcoming AI energy boom, with the potential for significant returns in the next 12 to 24 months [15][19]

Core Viewpoint - Investors in the Technology Services sector should consider Skillsoft Corp. (SKIL) and AppLovin (APP) as potential value opportunities, with SKIL currently presenting a stronger case for investment [1]. Group 1: Company Rankings and Outlook - Skillsoft Corp. has a Zacks Rank of 1 (Strong Buy), indicating a favorable earnings outlook, while AppLovin holds a Zacks Rank of 2 (Buy) [3]. - SKIL has likely experienced a stronger improvement in its earnings outlook compared to APP, making it more appealing to value investors [3]. Group 2: Valuation Metrics - SKIL has a forward P/E ratio of 2.13, significantly lower than APP's forward P/E of 40.72, suggesting SKIL is undervalued relative to APP [5]. - The PEG ratio for SKIL is 0.21, indicating strong expected EPS growth, while APP's PEG ratio is 2.04, suggesting less favorable growth expectations [5]. - SKIL's P/B ratio is 19.44, compared to APP's P/B of 141.61, further highlighting SKIL's relative value [6]. Group 3: Value Grades - Based on various valuation metrics, SKIL holds a Value grade of A, while APP has a Value grade of D, reinforcing SKIL's position as the superior value option [6].

Group 1 - AppLovin Corporation (NASDAQ:APP) is recognized as a strong growth stock, with analysts from Benchmark Co. and RBC Capital reiterating Buy ratings and price targets of $775 and $750 respectively [1][2] - Benchmark has named AppLovin as its "2026 EDM Top Idea," highlighting growth in e-commerce and web business, along with robust market growth in the gaming segment [2] - The company has seen improved advertiser density and increased adoption of its AXON Ads Manager, which could enhance its market share [2][3] Group 2 - Citi analyst Jason Bazinet also assigned a Buy rating with a price target of $820, noting a steady increase in e-commerce clients using AXON [4] - Although AXON's market penetration is currently modest, month-over-month growth indicates potential for further adoption and revenue expansion [4] - AppLovin is focused on building a software-based platform for advertisers to improve marketing and monetization of content [5]

Core Viewpoint - AppLovin Corp.'s share price experienced a significant decline of over 35% early last year due to a pending class action lawsuit and reports from short sellers, but the company's better-than-expected quarterly reports have contributed to a recovery in its stock price [1] Group 1 - The decline in AppLovin Corp.'s share price was attributed to a pending class action lawsuit [1] - Short seller reports also played a role in the stock's decline [1] - The company's quarterly reports exceeded expectations, aiding in the recovery of its stock price [1]

Core Insights - Anthropic, an AI startup, is preparing to launch its Claude 4 chatbot in January 2025, aiming to compete with products like ChatGPT and Gemini while seeking over $60 billion in funding, making it one of the highest-valued AI companies globally [1][2] - The rise of billionaires in the tech industry is largely attributed to companies like Google, Meta, Microsoft, and emerging firms like Anthropic and AppLovin, which have seen significant stock price increases driven by investor enthusiasm for AI [2][3] - Alphabet, Google's parent company, has created the most billionaires, totaling 10 individuals with a combined wealth exceeding $600 billion [4][6] Company Summaries - **Anthropic**: Founded by former OpenAI employees, Anthropic has quickly entered the AI race with its chatbot Claude, achieving a valuation of $60 billion by early 2025 and creating seven billionaires among its founders [16] - **AppLovin**: This digital advertising company has produced eight billionaires since its NASDAQ listing in 2021, with its stock price increasing over 1000% since then, reaching a market cap close to $250 billion [2][14] - **Google/Alphabet**: The company has generated 10 billionaires, including co-founders Larry Page and Sergey Brin, with a total wealth of $618.2 billion among them [8][10] - **Meta**: Facebook's parent company has created eight billionaires, including Mark Zuckerberg, with a total wealth of $314 billion [12] - **Microsoft**: The tech giant has five billionaires, including Bill Gates and Steve Ballmer, with a combined wealth of $290.5 billion [19][21] - **Blackstone**: This investment firm has produced six billionaires, with a total wealth of $68.5 billion [17] - **Snowflake**: The cloud services company has five billionaires, with a total wealth of $9.2 billion [22] - **Thoma Bravo**: This investment firm has also created five billionaires, with a total wealth of $33.2 billion [24]

Core Insights - The report emphasizes that in 2026, the media internet sector will undergo a dual reconstruction driven by the transition from AI as a "technical infrastructure" to "application deep water zone," focusing on entry form migration, distribution rule repricing, and supply-side capacity explosion [1][11] - AI Agents are set to replace traditional apps as the new super entry point, shifting the traffic distribution logic from "time capture" to "efficient execution" [1][12] - AIGC (AI-Generated Content) is expected to lead to a significant increase in content production capacity, with zero marginal cost production becoming a reality, thus redefining the value of quality data and IP [1][11] Group 1: AI Agents and Traffic Distribution - AI Agents signify a generational leap in human-computer interaction, evolving from GUI to IUI, fundamentally changing the traffic distribution logic [1][12] - The traditional "click-jump" model is being replaced by a "dialogue-execute" paradigm, where AI Agents understand user intent and execute tasks across applications [1][12] - The emergence of AI Agents is expected to create a new operational layer that could potentially replace single apps as the primary distribution entry point [1][12][19] Group 2: AIGC and Content Supply - AIGC is anticipated to transition from a phase of "cost reduction and efficiency enhancement" to a "new demand creation" explosion by 2026, significantly increasing content supply [1][41] - The production barriers for video, 3D, and gaming assets are expected to lower drastically, leading to a surge in content supply and a devaluation of mediocre content [1][41] - Content consumption is evolving from passive viewing to active engagement, with new formats like "generative interactive dramas" and "AI companion games" emerging [1][43] Group 3: Investment Recommendations - The investment strategy in the media internet sector is shifting towards high-quality assets in both traffic distribution and content supply, focusing on companies that can effectively capture user intent and provide quality content [1][41] - Companies with operational system bases or super Agent platforms are likely to gain new traffic distribution rights and bargaining power, while mid-tier apps lacking exclusive content may face risks of being "pipelined" [1][19] - Key players in the AI Agent space include Alibaba, Tencent, and ByteDance, which are actively developing their AI capabilities to secure new traffic entry points [1][25][40]

Company Overview - AppLovin Corporation (NASDAQ:APP) is a software platform that assists advertisers and app developers in marketing and monetizing their content, offering advertising solutions, analytics tools, connected TV services, and mobile games [2]. Market Position and Performance - AppLovin is recognized as the eighth-best stock in the Nasdaq-100, with significant retail following and a stock price that increased by 108% in 2025 after substantial gains earlier in the year [1]. - The company has experienced remarkable revenue growth, tripling its revenue over the past four years, and is projected to have earnings per share of $9.37 for 2025, more than double the expected figure for 2024 [1]. Valuation and Growth Expectations - AppLovin's stock is currently trading at 43 times this year's earnings estimates, which is considered expensive but relatively cheaper compared to Palantir [1]. - Wall Street anticipates continued growth for AppLovin, with expectations of 37% revenue growth and 56% earnings growth in the near future [1]. Competitive Landscape - The company appears to have a unique market position, with no identifiable competitors, suggesting a dominant presence in its sector [1].