ClearBridge Investments, an investment management company, released its “ClearBridge Mid Cap Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The fourth quarter was turbulent for mid-size stocks, which surged following the election and interest rate reductions before holding steady as the market shifted back to large cap leadership. The strategy outperformed its Russell Midcap Index during the fourth quarter driven by strong stock selection among IT and industrials holdings. In addition, please check the fund’s top five holdings to know its best picks in 2024.

In its fourth quarter 2024 investor letter, ClearBridge Mid Cap Strategy emphasized stocks such as AppLovin Corporation (NASDAQ:APP). AppLovin Corporation (NASDAQ:APP) develops a software-based platform for advertisers to enhance the marketing and monetization of their content. The one-month return of AppLovin Corporation (NASDAQ:APP) was -9.44%, and its shares gained 454.25% of their value over the last 52 weeks. On February 26, 2025, AppLovin Corporation (NASDAQ:APP) stock closed at $331.00 per share with a market capitalization of $112.554 billion.

ClearBridge Mid Cap Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q4 2024 investor letter:

"Stock selection in IT was the greatest contributor to performance on strength in AppLovin Corporation (NASDAQ:APP) and Marvell. AppLovin is the world’s leading mobile game and app advertising platform, providing software for marketing and monetization, powered by its proprietary AI targeting engine Axon. We see opportunity for AppLovin to continue to expand and grow its share of the market for mobile app marketing at a time when mobile gaming ad spend is recovering from a higher-rate-driven trough. We also see the potential for the company to expand its addressable market to include e-commerce advertising, around which initial forays have been encouraging. With strong incremental margins and management keeping expenses controlled, the company should be able to drive significant free cash flow growth as revenue continues to scale."

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

AppLovin Corporation (NASDAQ:APP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 95 hedge fund portfolios held AppLovin Corporation (NASDAQ:APP) at the end of the fourth quarter compared to 51 in the third quarter. AppLovin Corporation (NASDAQ:APP) reported strong fourth quarter with total revenue increasing 44% year over year to $1.37 billion and adjusted EBITDA increasing 78% to $848 million, achieving a 62% adjusted EBITDA margin. While we acknowledge the potential of AppLovin Corporation (NASDAQ: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 timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed AppLovin Corporation (NASDAQ:APP) and shared the list of hot AI stocks to watch. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

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