"AI+ digital advertising" hegemon Applovin (APP.US) smashes the "software stock doomsday theory"! AI dividend is branded into performance, Q4 net profit surges by 84%

Focus on the leader in AI applications for digital advertising, Applovin (APP.US), announced its fourth quarter and full-year performance for the 2025 fiscal year ending December 31, 2025 after the US stock market closed on Wednesday, Eastern Time. The company's actual performance and future revenue outlook exceeded the recent significant upward revisions by Wall Street analysts. With global funds continuing to flow into the AI computing infrastructure and AI application software sectors in recent years, Applovin's stock price surged by as much as 712% in 2024 and 110% in 2025. This was not only due to investors betting on the value increase brought by the accelerated penetration of AI applications into various industries, but also due to Applovin's strong revenue growth. For global software stock investors, Applovin has responded to short-selling forces with strong performance, proving that the "software stock doomsday" market narrative sparked by the emergence of Agent-based AI intelligences like Anthropic was exaggerated and that the market completely misjudged the platform software giants focusing on "AI + core operational processes" with strong fundamentals. Agent-based workflow AI intelligences do indeed pose a valuation impact on "automatable white-collar tasks" (hence the systematic cutting of the functional SaaS software sector by the market), but for large platform software giants focusing on mastering core operational processes such as data flow/content distribution/transaction execution, AI acts more like an accelerator of demand. Therefore, AppLovin's latest strong performance and future outlook indicate that platform software giants running critical enterprise workloads cannot be completely replaced by AI intelligences or generative AI applications, and instead may benefit in the long term from AI. Hence, the long-term bullish market logic is further reinforced, and buying on dips is the optimal strategy to address the stock price corrections of these software companies. Applovin's latest Q4 results show total revenue of approximately $16.58 billion, exceeding Wall Street analysts' recent average revenue expectations of about $16.1 billion, representing a significant year-on-year growth of 66%; GAAP net profit of approximately $1.1 billion, a significant year-on-year growth of 84%; GAAP earnings per share for the fourth quarter were $3.24, significantly higher than the average analyst expectation of about $2.96, and the $1.73 from the same period last year. On a non-GAAP basis, the company's adjusted EBITDA is approximately $13.99 billion, a significant year-on-year growth of 82%. For the 2025 fiscal year, Applovin's total revenue is approximately $54.81 billion, a significant increase of 70% over the 2024 fiscal year, with net profit of approximately $3.34 billion, a significant increase of 111%, and adjusted EBITDA of approximately $45.12 billion, a significant increase of 87%. In terms of the most anticipated performance outlook, Applovin's management expects total revenue for the first quarter of the 2026 fiscal year to be in the range of approximately $17.45 billion to $17.75 billion, indicating a potential sequential growth and significantly exceeding the average analyst expectation of approximately $17 billion, while the adjusted EBITDA expectation range is $14.65 billion to $14.95 billion, also higher than the Wall Street average expectations. AppLovin has successfully embedded generative AI and deep machine learning into their advertising technology core. AppLovin uses the AXON 2.0 engine combined with MAX/AppDiscovery to create a "buy to monetize" closed loop, driving revenue and profit towards a steep growth curve year over year. In the "AI + digital advertising" race, AppLovin has formed a data network effect + economies of scale, boosting eCPM and ROI, while rapidly exponentially increasing EBITDA. AXON, operating at microsecond speed, matches the highest ROI bid for each ad display by combining billions of user and contextual signals. Although AXON AI initially focused on acquiring users for mobile games, it now covers high-growth verticals such as e-commerce, fintech, and CTV. As software stocks are experiencing a massive sell-off, the growth narrative of "AI reshaping software profitability" is quietly spreading. Last week, the "software doomsday" (Software-mageddon) sweeping across global stock markets brought about by Anthropic, known as the "OpenAI rival," launched a series of AI tools/Agent-based AI intelligences collaboration platforms, triggering a widespread sell-off wave in the SaaS subscription software sector and the broader software sector. Influenced by this severe concern, the S&P 500 Software and Services Index has fallen by about 13% since late January and has wiped out nearly $1 trillion in market value in the week ending last Thursday. However, the market is gradually pricing in the growth narrative of software companies with AI: when AI significantly enhances optimization efficiency and reduces marginal decision costs, platform software companies may experience a "throughput enhancement + stronger unit economics" positive feedback loop instead of being completely replaced. A series of new AI tools introduced by Anthropic are essentially built on its "Claude Cowork" Agent-based AI intelligence, designed to handle extremely complex and specialized workflows that many software and data providers sell as core products. These AI tools and similar Agent-based AI intelligences focus on functions such as legal and technical research, customer relationship management, financial market analysis, and financial analysis, triggering concerns that AI may significantly weaken the business models of traditional SaaS software vendors. Earlier in January, Anthropic, the "OpenAI rival," introduced Claude Cowork, a highly innovative Agent-based AI programming tool designed to revolutionize engineering collaboration. This tool aims to extend the functionality of AI agents from programming terminals to broader office scenarios such as document management and software interaction, intensifying fears that AI intelligences could completely disrupt the SaaS software industry. The two main culprits behind the collective collapse of global software stocks that began last Tuesdaythe new AI tools introduced by Anthropic and a highly efficient Agent-based AI intelligence capable of executing multiple document tasks, including compliance tracking and legal document review, as well as the latest release on Thursday of Claude Opus 4.6 that surpasses GPT-5.2 large models in core analysis tasks such as AI programming, financial analysis, legal document deep analysis, and office collaboration. It is worth noting that legal document review, financial analysis capabilities, and proprietary data service technologies are the long-standing strongest moat of most SaaS software companies. Following the update last Thursday, financial analysis service provider FactSet had the worst intraday plunge of 10%, Thomson Reuters Corporation, S&P Global, Moody's Corporation, and NASDAQ Corporation continued to plummet, and the three major US stock indices fell across the board. However, Applovin has demonstrated with strong performance and future outlook that platform software companies running critical enterprise workloads will benefit in the long term from AI technology instead of being completely replaced by it. Those who control enterprise execution surfaces (security, IT/business process orchestration, data pipeline and observability, transactions and billing, compliance and risk control) are more likely to become the "default landing point" in the AI Agent era. Conversely, products that are "thin-function + pure seat subscriptions + can be directly output by Agent-based AI workflows" are more likely to be repriced. Looking at the underlying structure of software engineering and AI Agent-based workflows, Agents will not "replace" enterprise software as a whole but are more likely to shift the value from "human-point UI time" to "machine-call API throughput." An Agent that can run steadily in an enterprise environment requires not just generating text but verifiable identities and permissions (RBAC/ABAC), policies and approval chains, auditable logs, idempotency and rollback semantics, error budgets and observability (SLO/Tracing), and stringent rules for writing to business objects and state machines. The plug-ins mechanism of Claude Cowork is essentially doing the same thing: solidifying "how to work, which tools and data to use, how to handle key workflow processing, and exposing which commands to the team" into reusable execution templates, allowing the Agent to embed more deeply into the enterprise toolchain rather than bypassing it. AppLovin's strong financial results and guidance significantly reinforce the long-term growth logic of "platform software benefiting from AI," mainly because it demonstrates a very typical potential growth path: AI not only does not marginalize platforms but actually enhances platform unit economics and scale efficiency. The combination of "high profit margin + stronger-than-expected performance guidance" as seen in AppLovin often means that AI is lowering decision costs for platforms through better prediction/matching/optimization, thereby increasing throughput and cash generation capabilities. Platform software giants with strong fundamentals and a proactive embrace of AI present a buying opportunity on dips Many Wall Street analysts recently stated that software companies with robust fundamentals and a proactive adoption of AI are poised for a significant rebound trajectory. They agree with Huang Renxun's positive view on software stocksthat the market has misjudged the software giants focusing on "AI + core operations" with strong fundamentals. Therefore, for platform software companies like AppLovin that have "proven they can completely rewrite product delivery and pricing with AI and occupy critical nodes in enterprise execution surfaces," pullbacks often provide a better risk-return ratio, while for subscription software where the value is mainly derived from UI and manual workflow friction, pullbacks could pose a value trap. Huang Renxun stated that "software being replaced by AI" is "the most illogical thing," emphasizing that AI is more likely to layer onto existing large software platforms rather than starting from scratch. With ChatGPT sweeping globally, heralding the arrival of the AI era, this also means that the shift from "human-driven SaaS workbenches" to "AI-native task execution layers" has begun, and during this transition period, the easiest to replace are lightweight applications/simple workflows ("vibe coding" style rapid assembly will accelerate the glut of supply), which is why some analysts firmly believe that large platform software systems with deep integration, strong processes, and supply chain coupling like SAP and Microsoft Corporation are more likely to become the "foundation and cornerstone" in the AI Agent era. "There is likely to be a gradual erosion of SaaS providers by AI-driven workflows, which will undoubtedly impact the valuation multiples of this sector," said Rolf Bulk, a technology stock analyst at the Futurum Group. However, Bulk believes that some software providers, especially platform software companies running critical enterprise workloads (such as Microsoft Corporation, Oracle Corporation, and ServiceNow), still have a sustainable "right to earn." He added that their depth of data and entrenched roles in customer workflows make them more likely to coexist with AI in the long term and benefit from AI rather than being completely replaced. Rick Sherlund, one of Wall Street's most respected technology industry analysts who experienced the bursting of the internet bubble in 2000, and founder of the AI software investment bank Sherlund Partners, made a significant endorsement last Thursday for software stocks with strong fundamentals. Sherlund emphasized that the software industry goes through dramatic changes every 10 to 15 years, cautioning investors not to overly fear the threat of AI to mature businesses with strong fundamentals, especially those with complex enterprise-side operational workflows. Sherlund pointed out that while "vibe coding" may make simple applications easier to replace, companies like the German software giant SAP that have "extensive integrated platforms and supply chains" have a larger moat to protect their business and AI for them could be a "profit machine."