Down 69% from its high: Is this 84% margin ad-tech stock a bargain? RSS CTA

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Investing.com — Wall Street’s digital advertising obsession remains laser-focused on mega-caps like Meta Platforms (NASDAQ:META) and The Trade Desk (NASDAQ:TTD), but slowing top-line growth across the giants is forcing investors to look deeper into the supply chain. While the market chases crowded names at premium valuations, AppLovin (NASDAQ:APP) has absorbed brutal punishment: at $228.50, the stock sits roughly 69% below its 52-week high after a series of legal and competitive headwinds.

When a stock retreats this aggressively, panic usually dictates the share price. However, InvestingPro’s screening models track the real fundamentals underlying the stock. AppLovin continues to be an extraordinary cash generator, with excellent margins and little debt.

That combination of massive margins and steep valuation discounts highlights where the real opportunity lies across tech. Within that same high-margin universe, ProPicks AI’s Tech Titans strategy tracks an elite basket of cash-generative leaders—including an enterprise IT research advisor with 77% contribution margins, an analog semiconductor leader yielding steady dividend growth, and a mission-critical cybersecurity pioneer.

An ad marketplace still running at 84% EBITDA margins

AppLovin’s AI-powered platform helps advertisers win users and helps app developers earn more from their ad space. Its AXON system handles more than $10 billion a year in media spend, and its MAX marketplace runs the auctions for that space. Gaming remains the largest revenue source, but e-commerce advertisers are scaling fast.

Second-quarter revenue rose 53% year over year to $1.92 billion, roughly $20 million short of forecasts. Adjusted EBITDA reached $1.61 billion, an 84% margin. Management blamed lighter AI model improvements and said a stronger update landed just after the quarter closed. Shares still fell 16% after hours.

In August, the company said the third quarter had started strongly and guided revenue to $2.055 billion to $2.085 billion, up 46% to 48%, with adjusted EBITDA margins near 83%. Consumer advertiser spend hit a record in the second quarter, 28% above its fourth-quarter 2025 seasonal peak.

The business is also capital-efficient. In the 12 months to June, it turned $6.8 billion of revenue into $4.4 billion of net profit and earned a 62% return on assets. Management sees revenue compounding at about 30% a year over the long term.

Priced like the growth story is over

At $228.50, AppLovin trades at 17.3 times trailing earnings, far below its prior-year multiples. Wall Street consensus estimates call for EPS of $16.96 this year, $21.31 in 2027 and $26.66 in 2028, which puts the stock at roughly 13.5 times this year’s forecast.

InvestingPro’s Fair Value, which aggregates multiple discounted cash flow approaches, comes to $362.89, 58.8% above the current price, and carries a "Bargain" label. While InvestingPro’s Financial Health framework, which ranks companies on more than 100 indicators against sector peers, rates AppLovin "Great," backed by a perfect Piotroski score of 9 and net leverage near 0.1 times EBITDA. The 14-day RSI sits at 23.9, a reading usually taken as deeply oversold.

Wall Street is more optimistic than InvestingPro’s Fair Value. Analyst targets run from $325 to $625, with a consensus of $452.95, and even the lowest sits about 42% above the current price. Most brokers that have weighed in since August rate it a Buy.

The AppLovin Pro Research Report lays out the bull and bear cases behind that wide range, along with the latest broker ratings and targets.

Uncovering high-margin cash generators in tech

AppLovin proves that digital advertising profits extend far beyond the dominant walled gardens. While headline-grabbing mega-caps trade at premium multiples on slowing expansion, operators delivering 80%+ EBITDA margins and disciplined capital allocation generate tangible cash flow that the broader market has temporarily overlooked.

While AppLovin showcases the financial strength hiding within ad-tech, it represents just one opportunity across the technology sector. With the November rebalance now live, ProPicks AI strategies—including Tech Titans, Beat the S&P 500, and Top Value Stocks, and many more—have refreshed their holdings to capitalize on newly emerging valuation mispricings.

The newly updated portfolios feature fresh selections across resilient, high-return businesses, from mission-critical enterprise software enablers trading at deep discounts to specialized semiconductor leaders returning capital directly to shareholders.

For investors looking to identify high-margin tech leaders in the newly updated portfolios, full access to all ProPicks AI strategies costs just $9 a month.

The author holds no position in the stocks mentioned. Data and financial metrics as of November 2, 2026.