Top Funds Get Googly-Eyed Over This Breakout AI Stock Not Named Nvidia Or Palantir

Artificial intelligence juggernauts Nvidia (NVDA) and Palantir Technologies (PLTR) fell off the latest list of new buys by the best mutual funds. But making its seventh straight appearance on this monthly screen, AppLovin (APP) showed that AI stocks have life by topping the latest list.

Beating fellow AI giants Alphabet (GOOGL) and Broadcom (AVGO), which also saw massive capital inflows, these top money managers scooped up a whopping $20.15 billion worth of AppLovin stock. Boosted by that demand, the provider of AI-fueled solutions to help businesses grow and monetize their audiences broke out this week from a second-stage double-bottom pattern and remains in buy range.

AppLovin Rides Slowing, But Still Powerful Growth

Wall Street loves a track record of strong earnings and sales growth, and AppLovin certainly has one.

Over the last four quarters, the Palo Alto, Calif.-based company has generated sales growth ranging from 44% to 77%. In the third quarter, revenue rose 68% year over year to just over $1.4 billion.

Although earnings growth slowed from triple-digit gains in the prior three quarters, AppLovin generated 98% earnings growth for the third quarter to $2.45 per share. For the full year, analysts forecast a 108% increase in earnings to $9.41 a share, followed by a 56% rise to $14.66 per share in 2026.

Further indicators of demand for shares include an A- Accumulation/Distribution Rating and eight quarters of rising fund ownership.

AppLovin sports a near top-level 98 Composite Rating, meaning it is outpacing 98% of all stocks on key fundamental and technical factors. By comparison, Nvidia, Palantir, Broadcom, and Google stock each earn the highest possible 99 rating.

Alongside Google, AppLovin has secured a spot on the IBD 50 list of top growth stocks.

AppLovin Stock Breaks Out

Reflecting the volatility in the market indexes, AppLovin just formed and completed a double bottom, a common pattern in seesaw environments. The target buy point is 675, the peak in the middle of the lopsided “W” formation of double bottoms.

After teasing that entry earlier this week, AppLovin has jumped into buy range as its relative strength line spikes.

Checking in on other AI stocks to watch, Broadcom has shown resilience after pulling back after notching multiple record highs in October and November. Shares of the AI chipmaker quickly rebounded and are now slightly extended. Alphabet continues to float right around its all-time high.

Meanwhile, Nvidia remains mired below its 50-day moving averages, while Palantir climbed back above that line on Friday. To gauge technical strength and weakness, investors should also monitor the 21-day exponential moving average for both AI stocks. The 21-day line for Nvidia and Palantir continues to trend down, falling below the longer-term 50-day line. Look for that to turn around to show rising technical strength.

Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.

YOU MAY ALSO LIKE:

Tesla, Nvidia, Palantir On Wrong Side Of The Tracks. Keep Watching Them.

Top Funds Gobble Up These 4 Stocks – And Nibble On Nvidia, Palantir

Stay Profitable And Protected With This 3-Step Routine

Troubled Palantir, Nvidia Put The 8 ‘Secrets’ Of Selling In Focus. No. 2 Is Key.

See Which Stock Just Came On – And Off – These Premier Stock Screens