AppLovin stock posted 59% revenue growth and a 70% free cash flow margin in Q1 2026—numbers that look more like cheat codes than a real business. We break down what makes the Axon 2.0 machine learning ad engine so efficient, why AppLovin can scale without a traditional sales force, and how targeted digital advertising has become the clearest ROI story in AI so far. We also walk through management&#x27;s 10-year growth roadmap—from mobile gaming to consumer, e-commerce, and connected TV—and what has to be true for AppLovin to reach $70 billion in annual revenue. Then we run both a five-year and ten-year reverse DCF to show exactly what growth rate is already baked into the current stock price, and whether buying the dip today makes sense for long-term investors. Plus, how they&#x27;re deploying $1.3 billion in quarterly free cash flow, including nearly $1 billion in share buybacks in Q1 alone. Want real-time portfolio access and deeper coverage on high-growth software and semiconductor stocks? Join Semi Insider at chipstockinvestor.com. Run your own AppLovin research with AI-powered financial tools at fiscal.ai/csi — 15% off any paid plan. Content in this video is for general information or entertainment only and is not specific or individual investment advice. Forecasts and information presented may not develop as predicted and there is no guarantee any strategies presented will be successful. All investing involves risk, and you could lose some or all of your principal.CSI owns shares of AppLovin.

AppLovin Stock: Is It Time to Buy the Dip?

Chip Stock Investor Podcast

# Full Transcript

**Podcast:** Chip Stock Investor Podcast

## Participants

- **Nicholas Rossolillo** (Chip Stock Investor)
- **Kasey Rossolillo** (Chip Stock Investor)

## Transcript

Hey everyone, welcome back to Chip Stock Investor. It is another episode of the best use case for AI so far. Digital ads. Still digital ads. And still, I don't know how this is still a debate out there at all anywhere at this point, but the hyperscalers, especially Alphabet and Meta, have been investing in AI for years to improve their own internal AI algorithms that help with ad targeting.

Chip Stocks It's really quite simple. This is where, to date, most of the ROI is taking place. Digital Adler And today we're going to be talking about AppLovin. Is it Time to Buy the Dip on AppLovin? They've got video game cheat code financials, which we're going to show you with the help of our friends over at Fiscal here in just a moment. But as a reminder, where AppLovin fits in the supply chain, we filed that under Enterprise Software there at the end.

Chip Stocks Who has helped AppLovin develop their machine learning algorithms, Axon 2.0? Well, it operates in Google Cloud using, or at least it was trained on, who knows what it's being operated on right at this moment, but originally the NVIDIA L4 Tensor processors. So pretty incredible software running on not even the most advanced latest and greatest GPUs in existence.

Chip Stocks Nevertheless, here's those cheat code-like financials Casey referred to. Chip Stocks You're going to see a couple of charts from our friends over at Fiscal.ai, who are the sponsor of today's video. You're also going to see some quotes from the CEO Adam Fergie at a recent conference, Investor Day.

Fiscal already has all of those transcripts uploaded as well. So fantastic tool if you're researching a business like this. Fiscal.ai forward slash CSI gets you 15% off any paid plan. Okay, let's take a look at this first fiscal chart. We have total revenues in blue, free cash flow is in green, and operating profit in orange.

Chip Stocks In Q1, 2026 revenue increased 59% year over year. Adjusted EBITDA is the metric AppLovin uses to measure its operational profit progress. You can't use adjusted EBITDA. Chip Stocks They do. They totally do. And in this case, it kind of makes sense because look at that. Most of the revenue still just converts directly to free cash flow. It's pretty epic that a company this young and growing so fast at this kind of scale is generating that type of margin.

Free cash flow margin of 70% in Q1, 2026. And they do not expect that to slow down anytime soon. Up there in the left-hand corner, we have the forecast for Q2, 2026. They expect 54% year over year revenue growth and 60% year over year adjusted EBITDA growth in that Q2 this next quarter. What are they using all of that cash for?

App did throw their hat in the mix to purchase TikTok when that was available. That didn't happen, but there's still some discussion abou...

AppLovin Stock: Is It Time to Buy the Dip?

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

AppLovin Stock: Is It Time to Buy the Dip?

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.