We recently published a list of 12 Best Multibagger Stocks to Buy in 2025. In this article, we are going to take a look at where AppLovin Corporation (NASDAQ:APP) stands against other best multibagger stocks to buy in 2025.

In the world of investing, the term “multibagger” refers to stocks that have the potential to deliver returns several times greater than the original investment. One key factor that can help identify potential multibaggers is momentum. Momentum investing focuses on capitalizing on the continuation of existing market trends. Investors using this strategy look for stocks that are experiencing upward price movements, often driven by strong earnings reports, positive news, industry tailwinds, or overall market sentiment. The idea is simple: “the trend is your friend,” and momentum can be a powerful force in identifying winners before they peak. The importance of momentum has been recognized by famous investors, but many of them emphasized the idea that it is crucial to catch momentum stocks early on. As Warren Buffett put it – “What the wise do in the beginning, fools do in the end”.

READ ALSO: 12 Best Multibagger Penny Stocks to Buy Now

The US market is close to entering a correction mode as the absolute magnitude of decline since the mid-February peak is approaching 10%. The current policies of the new US administration, such as tariffs, federal jobs cuts and cuts in some large-scale public projects, are causing havoc among investors as many are fearing a scenario in which the US economy enters stagflation – a period of high inflation among weak economic growth and unemployment. Some analysts have pointed out that sectors reliant on government contracts, such as infrastructure and defense, are already experiencing heightened volatility as a result of these policy shifts. In a recent interview with Maria Bartiromo on Fox News, the President himself refused to rule out a recession in the current year and claimed that the economy is in “a period of transition” and that tariffs might fuel inflation at some point. With consumer confidence showing early signs of weakening, as signaled by recent business surveys, some economists argue that the Federal Reserve may be forced to intervene sooner than expected to stabilize the markets. This idea was already supported by the President, who at some point expressed the opinion that interest rates in the US economy are higher than they should be.

The aforementioned developments have caused a market selloff, particularly in previously high-momentum stocks such as the Magnificent 8, which have benefited from the AI megatrend and were responsible for most of the market returns last year. Prior to that, many previously well-performing stocks, such as government contractors, had already lost their momentum following the election results, while some of the few well-performing healthcare stocks were hit by Medicare/Medicaid reimbursement threats. Likewise, the energy sector remained somewhat out of favor – despite volume tailwinds from Trump 2.0, the expectation of lower oil prices amid a weaker economy has put downward pressure on stock prices in the sector. The key takeaway for investors is that one should look for multibaggers that haven’t yet lost their momentum during the market dip in the last month. These are often lower-capitalization companies that are underfollowed by analysts and operate in high-growth markets.

Our Methodology

To compile our list of multibagger stocks, we used Finviz to filter the companies that have delivered at least 200% stock price return in the last twelve months. Then we compare the list with our proprietary database of hedge funds ownership as of Q4 2024 and include in the article the top 12 names with the highest number of hedge funds that own the stock.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A close-up of a mobile device, showing an advertiser reaching out to a consumer via a software-based platform.

AppLovin Corporation (NASDAQ:APP)

Number of Hedge Fund Holders: 95

Stock Price Return in the last twelve months: 320%

AppLovin Corporation (NASDAQ:APP) is a mobile app technology company that provides a platform for app developers to market, monetize, and analyze their applications. Its services include user acquisition, advertising solutions, and analytics tools designed to help developers grow their businesses and maximize revenue. APP’s platform supports a wide range of mobile apps across gaming, entertainment, and other industries, using machine learning and data analytics to optimize ad campaigns. The company operates globally, connecting advertisers and developers to improve the mobile advertising ecosystem. The California-based company ranked first on our recent list of 10 Hot AI Stocks to Buy Now.

AppLovin Corporation (NASDAQ:APP) has demonstrated extraordinary growth inflection over the past 2 years, driven by their differentiated culture and focus on building a team of entrepreneurial doers. The company expects 20-30% long-term growth in their core gaming ads business, supported by reinforcement learning driving 5% growth per quarter and directed model enhancements contributing at least 10% annual growth. APP is expanding beyond gaming into e-commerce advertising, with early tests showing exceptional results, marking it as their best and fastest-growing product release ever.

AppLovin Corporation (NASDAQ:APP) maintains a highly efficient operating model, achieving approximately 90% flow-through from revenue to EBITDA over the past 4-6 quarters, with expectations for margin improvement. Their strategy emphasizes automation and AI implementation rather than headcount expansion, with plans to actually reduce employee count while growing revenue. The company continues to prioritize share repurchases as the primary use of their substantial free cash flow, with a current $2.3 billion authorization. Looking ahead, APP aims to expand beyond being a niche gaming market player to creating broader digital economies, similar to how major tech companies have built their businesses.

Overall, APP ranks 1st on our list of best multibagger stocks to buy in 2025. While we acknowledge the potential of APP as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.