AppLovin's (APP) Q4 financial performance exceeded expectations, driven by strong gaming growth and increasing e-commerce adoption, UBS Securities said Thursday in a report.

The mobile technology company's Q4 net income surged to $1.73 per diluted share from $0.49 a year earlier, while revenue increased to $1.37 billion from $953.3 million.

Q4 advertising revenue surged 73% to $999 million, beating estimates by 26%, with strong gaming growth and early e-commerce traction from mid-sized direct-to-consumer brands, and non-gaming advertisers, including fintech, insurance, and auto, are expanding, with strong publisher feedback on e-commerce ads, the report said.

Challenges include uncertainty around e-commerce revenue contributions, delays in the self-service platform rollout and the need for sustained investment to maintain momentum in non-gaming advertising, UBS said.

UBS raised its forecast for 2026 earnings before interest, taxes, depreciation and amortization forecast by 15% to $5.75 billion with e-commerce expected to generate $1.25 billion by 2026, the report said.

UBS raised its price target on AppLovin stock to $630 from $440 and maintained its buy rating.

AppLovin shares jumped 26% in recent Thursday trading.

Price: 477.31, Change: +96.99, Percent Change: +25.50