Duolingo (DUOL) is poised to benefit from the adoption of generative artificial intelligence in the areas of more effective learning, internal efficiencies and monetization, Morgan Stanley said in a Wednesday note.
"Unlike some Gen AI plays, benefits are not speculative - [Duolingo] has already demonstrated and quantified contribution to both the top-line and bottom-line," the investment bank said.
The firm said that on the revenue side, the company's Gen AI subscription tier Max has already risen to 5% of the subscriber base, while on the cost side, the company boosted course creation about 10 times with a 38% increase in headcount.
Morgan Stanley said gains are likely compounded amid improving Gen AI tools.
"[Duolingo] is a clear Gen AI beneficiary, a rare commodity in SMID Internet," the firm said.
Morgan Stanley initiated coverage on the company with an overweight rating and a $435 price target.
Duolingo shares rose 9.8% in recent trading.
Price: 369.31, Change: +32.97, Percent Change: +9.80
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.