Applovin Corporation (NASDAQ:APP) is emerging as a major force in digital advertising, reshaping the mobile gaming ecosystem into a powerful channel for e-commerce engagement.
Bank of America said AppLovin’s mobile gaming ecosystem appears capable of absorbing the surge in e-commerce ad demand expected through 2026, citing strong supply growth and improving conversion efficiency.
The brokerage reiterated its Buy rating and $860 price forecast, implying a 36.6% upside from the current share price of $629.70.
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Analyst Omar Dessouky said AppLovin has begun transforming mobile gaming into a major channel for e-commerce merchants, who are forecast to spend $6.8 billion in 2026, up from about $1.8 billion in 2025.
While investors remain concerned that the increase in e-commerce ads could cannibalize gaming inventory, Bank of America expects technology-driven conversion gains and modest supply expansion to accommodate new demand.
AppLovin’s MAX ad supply has grown at roughly 20% CAGR since 2022 and could accelerate to 34% year-on-year in 2026, the report said.
Bank of America said 25-40% of total mobile gaming engagement occurs in titles that do not currently display ads, highlighting a large untapped opportunity if these publishers begin accepting e-commerce advertising.
The firm noted that while many developers remain reluctant to add ads for fear of disrupting gameplay, higher CPMs and the rise of hybrid monetization models could make adoption more appealing.
The analyst estimates an additional $8 billion in potential ad-spend capacity if more developers integrate e-commerce advertising, though the effective market opportunity may be smaller since some studios remain opposed to in-game ads.
The bank said overall mobile-gaming engagement rose 7-9% year-to-date, supporting AppLovin’s double-digit supply growth guidance. Engagement gains were broad-based, with smaller games outpacing the top 200 titles.
On financials, Bank of America expects sales to rise from $5.5 billion in 2025 to $9.1 billion in 2026, with EBITDA forecast to climb from $4.5 billion to $7.6 billion over the same period.
AppLovin’s adjusted earnings per share are estimated at $9.71 in 2025, rising to $18.12 in 2026 and $23.95 in 2027.
The firm’s valuation model assumes a 39x EV/2026E EBITDA multiple, slightly above the average for Rule of 40 software peers, reflecting premium growth prospects from e-commerce ad adoption.
Price Action: APP shares were trading lower by 4.77% to $599.65 at last check Thursday.
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