Morgan Stanley Adjusts Price Target on AppLovin to $450 From $650, Keeps Overweight Rating

Morgan Stanley reduced its price target for AppLovin (NASDAQ: APP) to $450 from $650, citing valuation concerns. The stock is down 52% YTD and 44% over the past year. The firm maintains an Overweight rating, noting strong revenue growth and gross margins, but expects deceleration in gaming ad business. Other analysts have also lowered price targets due to revised estimates and growth concerns.

AppLovin (APP) reported higher revenue growth than The Trade Desk (TTD) over the last eight quarters, with a 78% operating margin for Q2 2026. The Trade Desk, with a 14% operating margin, announced restructuring. AppLovin projects Q3 2026 revenue of $2.1B, while The Trade Desk expects $650M, down from $739M in Q3 2025.

AppLovin (APP) shares rose 2.5% after Citi initiated a short-term upside view, setting a $600 price target and predicting a 91% gain over 90 days, according to analyst Aarushi Gupta.

Citi initiated a short-term upside view on AppLovin (APP), setting a $600 price target and predicting a 91% gain over 90 days. The firm believes the company can meet or exceed its 3Q26 guidance, despite investor concerns about recent growth. Citi also expects e-commerce to eventually drive topline growth more than gaming, citing a larger addressable market and attractive ad spend returns.

The S&P 500 rose 12.2% this year, but The Trade Desk (TTD), AppLovin (APP), and Lululemon (LULU) fell 62%, 53%, and 52%, respectively. TTD's revenue grew 3% to $715M in Q2, with weak guidance. APP's revenue rose 53% to $1.92B but missed expectations. LULU's revenue dropped 4% to $2.4B in Q2, with slowing growth in key regions.

Magnite (MGNI) and The Trade Desk (TTD) rose 6% and 5% respectively after launching agentic AI products, while AppLovin (APP) remained flat. Year-to-date, MGNI is up 41%, while TTD and APP are down over 50%. The moves reflect investor rotation within the agentic theme, not a broad tech sector shift.