Core Viewpoint - AppLovin's stock has surged over 75% this year, raising questions about its valuation and sustainability in the context of the AI AdTech revolution, with a current valuation around $200 billion [1][13]. Group 1: Customer Base and Revenue Model - AppLovin's revenue model heavily relies on two high-risk customer groups: mobile game developers and aggressive e-commerce brands [5][11]. - Mobile game developers, referred to as "Whales," depend on user acquisition strategies, paying AppLovin to attract users willing to spend on in-game purchases [11]. - E-commerce brands, termed "Arbitrageurs," utilize AppLovin for cost-effective advertising as alternatives like Meta have become too expensive [11]. Group 2: Competitive Landscape and Technology - AppLovin's competitive edge lies in its ability to track user behavior within apps, leveraging its MAX mediation platform to optimize ad inventory across over 100,000 games [12]. - The AXON 2.0 AI engine enhances targeting precision, allowing AppLovin to identify high-value users more effectively than competitors like Meta, which faces limitations due to privacy changes [12]. Group 3: Valuation Concerns - AppLovin's current price-to-sales ratio is approximately 35x, necessitating over 50% growth annually for the next five years to justify this valuation [9][12]. - The mobile gaming market, which is AppLovin's core focus, is growing at a modest rate of 5-8%, raising concerns about the sustainability of its high valuation [12]. Group 4: Insider Activity and Market Sentiment - Recent insider selling, including over $350 million by Director Herald Chen, signals potential concerns about the company's future prospects [17]. - The leadership's exit raises questions about the company's long-term growth potential, especially given its current valuation compared to established tech giants [13][17]. Group 5: Future Risks and Market Dynamics - AppLovin's reliance on user data tracking poses risks, particularly if major players like Apple and Google tighten privacy regulations, which could impair its operational capabilities [17]. - The potential for a market correction is highlighted by the disparity between AppLovin's valuation and the actual growth of its core markets, suggesting that the "AI Ad" bubble may burst as investor sentiment shifts [14][17].

Core Insights - Nvidia and Broadcom are prominent players in the AI sector, but other companies have also significantly benefited since the launch of ChatGPT [1] Company Highlights - Nvidia has been a leader in AI technology, capturing substantial market attention and investment [1] - Broadcom is also making strides in the AI space, contributing to the competitive landscape [1] - Other companies, not as widely recognized, have experienced considerable gains in the AI market following the introduction of ChatGPT [1]

And welcome back to Worldwide Exchange. Time for this morning's insider action. We're tracking notable insider stock moves by company directors and executives that are outside their pre-planned stock sales.As always, the data comes from Varity Data, but is then confirmed by CNBC's data team against SEC filings. Okay, we're going to start with Chevron director John Hes selling more than 500,000 shares from a trust for nearly $83 million. He joined the board in July after Chevron bought for 53 billion.Applovi ...

Core Insights - AppLovin has established itself as one of the most profitable and scalable online advertising companies globally, with strong demand from both advertisers and suppliers [1] Company Overview - AppLovin's various offerings are driving significant demand, indicating a robust business model and market positioning [1] Market Position - The company is recognized for its profitability and scalability within the online advertising sector, highlighting its competitive advantage [1]

Core Insights - AppLovin has established itself as one of the most profitable and scalable online advertising companies globally, with strong demand from both advertisers and suppliers [1] Company Overview - AppLovin's various offerings are driving significant demand, indicating a robust business model and market positioning [1] Market Position - The company is recognized for its profitability and scalability within the online advertising sector, highlighting its competitive advantage [1]

Core Insights - AppLovin Corporation (NASDAQ:APP) is recognized as one of the 15 best-performing AI stocks heading into 2026, with multiple analysts reiterating positive ratings and increasing price targets [1][2][3] Analyst Ratings and Price Targets - Citi has reiterated a Buy rating on AppLovin with a price target of $820 [1] - Wells Fargo raised its price target from $633 to $721 while maintaining an Overweight rating, attributing the company's strong Q3 performance and Q4 guidance to mobile gaming [1] - Piper Sandler increased its price target from $740 to $800 and also maintained an Overweight rating following the company's Q3 results, which exceeded consensus estimates [2] Performance and Growth Drivers - AppLovin's Axon Ads Manager has seen a 50% increase in spending week-over-week since early October, indicating strong adoption and performance [3] - The positive guidance is primarily supported by improved gaming seasonality and increased spending from existing e-commerce customers, with potential for further growth as new advertisers are onboarded [3] Company Overview - AppLovin Corporation is an American technology company that provides end-to-end software and AI solutions for businesses to reach, monetize, and grow their audiences [4]

Market Overview - U.S. stock markets closed higher on November 28, 2025, with all three major indexes extending a multi-day rally, driven by hopes for future interest rate cuts and positive economic data [1][12] - The Dow Jones Industrial Average (DJIA) rose 0.6% to 47,427.12, the Nasdaq Composite (IXIC) increased by 0.7% to 23,214.69, and the S&P 500 (SPX) gained 0.5% to 6,812.61, marking the fifth consecutive session of increases for all three benchmarks [2] Weekly Performance - For the week, the Nasdaq surged 4.9%, the S&P 500 was up approximately 3.7%, and the Dow gained about 3.2% [3] - November was mixed; while the S&P 500 and Dow extended their winning streaks to seven months, the Nasdaq ended down 1.5%, attributed to reassessment of profitability timelines for major AI companies [3] Economic Data - Initial jobless claims decreased by 6,000 to 216,000, below the consensus estimate of 229,000, indicating a strong labor market [5] - Orders for durable goods rose by 0.5% in September, missing estimates, while non-defense capital goods orders increased by 0.9%, a key indicator for business spending [5] Upcoming Events - Market participants are monitoring the potential for another interest rate cut by the Federal Reserve next month, which is a significant driver of market optimism [4] - Kevin Hassett is a key contender for the next Fed Chairman, with an announcement expected from President Trump before Christmas, which could influence monetary policy expectations [4] Individual Stock Performance - Intel (INTC) surged 10.2%, leading the S&P 500, following speculation it could become a foundry supplier for Apple (AAPL) processors [7] - Eli Lilly (LLY) shares slipped 2.6%, giving back some recent gains despite a market cap exceeding $1 trillion due to sales of weight-loss drugs [8] - Nvidia (NVDA) shares slid 1.8% amid competitive concerns, while other tech stocks like Microsoft (MSFT) and Amazon (AMZN) saw gains of 1.3% and 1.8%, respectively [9] Sector Performance - Retailers performed well on Black Friday, with Walmart (WMT), Target (TGT), and Amazon (AMZN) finishing up roughly 1% to 2% [10] - Cryptocurrency-related stocks rose as Bitcoin moved above $90,000, with Marathon Digital Holdings (MARA), MicroStrategy (MSTR), and Coinbase Global (COIN) up by 7%, 5%, and 5%, respectively [11]

Core Insights - AppLovin Corporation (APP) is a software-based platform provider for advertisers, enhancing marketing and monetization of content, with a market cap of $198.2 billion [1][2] - The company has shown strong stock performance, with a year-to-date increase of 81.1% and a 52-week surge of 77.8%, significantly outperforming the S&P 500 Index [4][6] Financial Performance - AppLovin reported a 68.3% year-over-year revenue increase to $1.4 billion in Q3, exceeding consensus estimates by 4.1% [5] - The adjusted EPS rose 96% year-over-year to $2.45, surpassing consensus estimates by 3.4% [5] Market Position - AppLovin's stock has consistently traded above its 200-day moving average over the past year, indicating a bullish trend [4] - The company has outperformed its peer, Trade Desk, Inc. (TTD), which has seen a 66.7% decline year-to-date [6] - Among 26 analysts covering APP stock, the consensus rating is a "Strong Buy," with a mean price target of $697, representing an 18.9% premium to current price levels [6]

Core Insights - Sands Capital Select Growth Strategy reported a portfolio return of 6.3% in Q3 2025, underperforming the benchmark's 10.5% gain, driven by strong corporate earnings and AI enthusiasm [1] Company Overview - AppLovin Corporation (NASDAQ:APP) is a leading provider of advertising solutions for mobile game developers, with a one-month return of -7.10% and a 52-week gain of 78.47% [2][3] - As of November 26, 2025, AppLovin's stock closed at $586.37, with a market capitalization of $198.34 billion [2] Financial Performance - AppLovin's revenue increased by 68% year-over-year to approximately $1.405 billion in Q3 2025, with EBITDA margins reaching 81%, reflecting a 900 basis point expansion compared to the previous year [4] Strategic Initiatives - AppLovin plans to launch a self-serve ad manager in beta during Q4 2025, aiming to expand its reach beyond gaming into e-commerce, which is seen as a significant growth opportunity [3] - The company is adopting an AI-first approach, focusing on automation and AI-driven creative tools rather than relying on a large sales force [3]

Core Insights - The letter discusses the ongoing exploration of intriguing investment opportunities for the upcoming year, emphasizing a proactive and opportunistic investment approach [2][3] - The firm expresses a long-standing bullish stance on AI, particularly in companies like Nvidia, while acknowledging a more selective investment strategy due to recent market developments [6][7] Investment Performance - The fund's annualized return since inception in November 2020 stands at +21.30%, significantly outperforming the South African Consumer Price Index (CPI) of +10.44% [4] - The fund's performance over the years shows fluctuations, with a notable recovery in 2023 at +30.82% after a decline of -34.25% in 2022 [4] AI Infrastructure and Market Dynamics - There is a growing skepticism regarding the AI infrastructure investments, particularly concerning the balance between capital expenditure and actual returns, leading to questions about over-capacity and potential market bubbles [5][7] - The current profit pool in the AI industry is unevenly distributed, with companies like TSMC and Nvidia capturing most of the value, while the overall industry returns on capital remain respectable [8][9] Credit Market Insights - Credit markets are seen as a crucial source of capital for AI infrastructure development, with major tech platforms tapping into these markets, indicating that the cycle is still in its early stages [14][15] - The firm notes that despite equity investor skepticism, credit investors remain optimistic, which may signal a favorable environment for continued investment in AI infrastructure [15][16] Currency Impact - A strong South African Rand is identified as a headwind for reported returns, as the fund has approximately 80% of its assets offshore, which could negatively impact returns when converted back to local currency [17] Administrative Changes - The fund administrator has undergone consolidation, but the investment strategy and philosophy remain unchanged, with only operational adjustments being made [18][19]