1844 ET - Investors seem to find Duolingo's significant investments toward AI and automation risky at this time. The language-learning app is growing "pretty fast in all of its markets," but the market doesn't seem to embrace the effects that this push in expenses will have on its margins. Duolingo, which also expects its revenue growth to step down throughout the year, projects a hit of roughly 300 basis points to margins in the 1H, followed by an improvement in the 2H as it works to improve AI costs. "While this means a more moderate pace of profit growth compared to the exceptional levels of the past two years, we're still delivering margin expansion just with an eye on building something even bigger," CEO Luis von Ahn says on a call with analysts. Duolingo shares fall 8% in after-hours. (sabela.ojea@wsj.com; @sabelaojeaguix)

(END) Dow Jones Newswires

February 27, 2025 18:44 ET (23:44 GMT)

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