Chicago, IL – March 14, 2025 – Zacks Equity Research shares AppLovin Corporation APP as the Bull of the Day and ON Semiconductor ON as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nucor Corp. NUE, Cleveland-Cliffs Inc. CLF and United States Steel Corp. X.
Here is a synopsis of all five stocks:
AppLovin Corporation is an artificial intelligence stock that outperformed Nvidia over the last two years, soaring 2,000% compared to NVDA's 400%. Yet, investors can buy APP stock 50% below its highs and 85% below its average Zacks price target.
AppLovin's massive selloff was necessary and healthy after the AI-powered digital app monetization company became overheated. APP stock and the broader AI trade may face more near-term selling and volatility.
However, long-term investors should tune out the noise and recognize that selloffs present excellent opportunities to buy strong stocks at steep discounts.
Buying AppLovin down 50% from its peaks is more appealing given its robust AI-driven earnings and revenue growth outlook.
Plus, Wall Street remains bullish on the stock, and APP is finding support near key technical levels while trading at more attractive valuation multiples.
People across the U.S. and the world are glued to their smartphones. AppLovin's mission is to help app companies vying for their attention grow and succeed.
AppLovin's diverse product lineup provides essential tools for clients striving to thrive in the increasingly competitive digital app landscape.
AppLovin's technology helps its clients in mobile gaming and beyond boost user acquisition, enhance engagement, and maximize customer value throughout their lifetimes as users. The company connects clients to "in-app audiences, mobile users, CTV viewers, and more."
AppLovin nearly doubled its sales (+93%) in 2021. Following that standout year, growth slowed to 1% in 2022 as the digital ad market slumped, dragging down Meta META and others as well.
The nearly $800 billion-a-year digital advertising market has roared back to life in recent years. More importantly, AppLovin's AI-boosted portfolio has delivered tangible results that clients are willing to pay for, leading to surging revenue and earnings for APP.
APP launched its advanced machine learning and AI-driven AXON technology in the second quarter of 2023. That year, AppLovin grew its revenue by 17% and swung from a loss of -$0.52 per share to a profit of +$0.98. In 2024, it followed up with 43% sales growth and 362%.
AppLovin crushed our Q4 EPS estimate by 29% on February 12. More significantly, APP's upbeat guidance sent its FY26 earnings outlook soaring.
The company plans to streamline its workforce through AI-based automation even as its business thrives. CEO Adam Foroughi wrote in a letter to shareholders, "I believe in running a lean organization driven by automation and efficiency. Many companies claim to embrace an entrepreneurial mindset, but few aim to reduce headcount even when facing growth opportunities."
Looking ahead to 2025, APP is focusing on five key growth pillars. One initiative centers on "personalizing ad experiences" with AI to create "countless iterations and dynamically select personalized creatives for each user," boosting engagement and response rates.
Personalized ads represent the next frontier in the ad industry, shifting from the current "static" experience—where "users see similar-looking advertisements created by humans"—to a more dynamic, tailored approach.
AppLovin is also working to expand its impact across industries, aiming to become a one-stop ad platform for direct-to-consumer businesses, gaming companies, and others in the digital economy.
Underpinning these efforts is a focus on AI-driven automation and personalization. APP is projected to grow its revenue by 20% in both 2025 and 2026, rising from $4.71 billion in FY24 to $6.78 billion in FY26.
The digital app monetization firm is expected to grow its earnings by 52% in 2025 and 37% in 2026, following 362% bottom-line expansion in 2024. This trajectory would lift AppLovin's EPS from $0.98 per share in FY23 to $9.42 in FY26.
APP's FY26 earnings estimate jumped 25% since its Q4 release, with its FY25 estimate up 14%, earning it a Zacks Rank #1 (Strong Buy).
Over the past 12 months, APP's 2026 consensus EPS estimate has surged 130%. AppLovin has also beaten our EPS estimates by an average of 24% over the last four quarters.
AppLovin stock skyrocketed 2,000% over the past two years after a steep drop in 2022 alongside the broader market.
APP's two-year surge outpaces Nvidia's NVDA 400% and dwarfs digital advertising giant Meta's META 225%. Since its April 2021 IPO, the stock has climbed 300%, compared to a 30% rise for the Tech sector and a 90% gain for Meta.
These standout returns include AppLovin's roughly 50% plunge from its mid-February peaks.
AppLovin is trading approximately 87% below its average Zacks price target, and 16 of the 21 brokerage recommendations tracked by Zacks are "Strong Buys."
AppLovin might test its 200-day moving average, even though it has already fallen from heavily overbought RSI levels to oversold territory. But it found buyers near its November gap up following stellar earnings and Trump election euphoria.
The stock also trades at a 93% discount to its all-time highs and 18% below its median, at 36.9X forward 12-month earnings. AppLovin's valuation is now closer to the Tech sector's 1.5 Price/Earnings-to-Growth (PEG) ratio, at 1.8, aligning with its historical median.
Given near-term market uncertainty, investors may be wise to dip their toes into AppLovin and other beaten-down AI stocks rather than diving in headfirst.
That said, AppLovin's sharp and rapid selloff—alongside other AI names like Palantir, Nvidia, and Constellation Energy—offers investors who missed the last rally a chance to buy APP at a lower price and a more reasonable valuation. If the stock slides further, bullish investors might consider adding to their positions.
ON Semiconductor is facing setbacks within the historically cyclical chip industry, exacerbated by headwinds in the electric vehicle (EV) space and the industrial sector.
ON Semi provided downbeat earnings guidance once again when it reported its Q4 results in early February.
ON stock has declined 22% over the last three years, while the Zacks Tech Sector surged 50%. Wall Street has soured on the chip stock amid shifting industry conditions that have led to declining earnings and revenue.
ON Semi is a standout in the analog chip industry, offering solutions for the industrial and automotive sectors. Over the past few years, the company has focused on boosting margins and exiting low-margin, non-core products. A pivotal 2021 acquisition transformed ON Semi into a silicon carbide supplier, a key material used in EVs, chargers, energy infrastructure, and more.
ON Semi posted strong growth in 2021 and 2022, fueled by soaring EV sales and increased spending on sustainable energy and industrial automation. However, the company operates in a cyclical business tied to the broader boom-and-bust spending patterns of the automotive and industrial sectors.
The EV market is currently experiencing a downturn after years of rapid growth, and industrial markets are also slowing. ON Semi's revenue fell 14% in 2024, following a 1% decline in 2023. Meanwhile, its earnings dropped 23% last year after a 3% dip in FY23.
On February 10, ON Semi issued dismal EPS guidance, causing its Q1 consensus estimate to plunge 45%. Over the past few months, its earnings estimates for 2025 and 2026 have fallen 40% and 29%, respectively, contributing to its Zacks Rank #5 (Strong Sell).
ON Semi's long-term outlook likely remains solid, and the company is confident it can weather these near-term challenges. "Our actions over the last four years have proven we are a structurally different company that is well-equipped to navigate prolonged volatility," CEO Hassane El-Khoury said in prepared remarks.
That said, investors might want to look elsewhere for now. Calling a bottom for ON Semi could be particularly challenging, as uncertainty has intensified across the stock market and the economy, driven in part by ongoing tariff battles.
The U.S. steel industry is at a critical juncture following the Trump administration's imposition of a 25% tariff on all steel imports, which took effect yesterday. These tariffs, aimed at revitalizing domestic steel production, reducing dependency on imports and protecting U.S. steel manufacturers from unfair competition, have already begun to positively impact U.S. steel prices, which saw a sharp decline last year amid increased imports and weaker end-market demand.
The tariffs have provided a much-needed boost to American steelmakers, which have struggled against an influx of cheaper imports in recent years. As the U.S. steel industry enters a new phase, companies like Nucor Corp., Cleveland-Cliffs Inc. and United States Steel Corp. stand to capitalize on higher prices, reduced competition against cheaper imported steel and increased demand for U.S.-made steel.
NUE currently carries a Zacks Rank #3 (Hold) each. CLF has a Zacks Rank #4 (Sell), while X holds a Zacks Rank #5 (Strong Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
One immediate effect of the tariffs has been a surge in U.S. steel prices. Benchmark hot-rolled coil (HRC) prices saw a significant downward correction in 2024 amid a slowdown in end-market demand and oversupply, which dented the profitability of domestic steel makers including Nucor, Steel Dynamics and United States Steel. HRC prices tumbled more than 40% last year from $1,200 per short ton at the start of 2024.
The downside was due to a combination of factors, including a pullback in steel mill lead times, an oversupply of steel exacerbated by increased imports, reduced demand from key industries and economic uncertainties. Sluggish industrial production and construction activities also contributed to the decline.
HRC prices have been on the rise lately due to expectations of reduced foreign supply and greater reliance on domestic production. The uptick has also been backed by steel mill price hikes. HRC prices have surged above $900 per short ton and are already up more than 30% so far this year. With end-market demand improving, steel prices will likely continue to climb, benefiting U.S. steelmakers with higher profit margins. Cleveland-Cliffs, on its fourth-quarter call, lauded the imposition of steel tariffs, emphasizing its role in protecting and strengthening domestic producers.
Beyond price increases, the tariffs would provide long-term benefits for the U.S. steel industry by encouraging reinvestment in manufacturing capabilities. Tariffs would incentivize U.S. steelmakers to expand operations, upgrade facilities and even reopen idled plants, leading to job creation in key steel-producing regions. This aligns with the Trump administration's broader goals of strengthening American manufacturing and reducing reliance on foreign production, particularly from countries like China.
Despite the positive effects on the domestic steel industry, the tariffs come with significant risks. One of the primary concerns is the retaliatory tariffs from key trading partners. Canada said yesterday that it will impose 25% tariffs on more than $20 billion worth of U.S. goods, including steel and aluminum, in retaliation to the Trump administration's measures. The European Union is also imposing counter-tariffs on more than $28 billion worth of U.S. goods starting in April.
These retaliatory measures could hurt American exporters in industries ranging from agriculture to automotive manufacturing, dampening the broader economic benefits of the steel tariffs. Furthermore, U.S. manufacturers that rely on steel as an input, including the automobile and construction industries, are likely to face higher costs, which may eventually be passed on to consumers.
Another serious concern is the specter of a global trade war. If tensions escalate and countries continue imposing countermeasures, global trade flows could be severely disrupted. This could hurt overall economic growth and, in turn, weaken demand for steel in the long run. While U.S. steel companies may enjoy short-term gains from the tariffs, a protracted trade conflict could create uncertainties that offset these benefits.
In the coming months, the trajectory of the U.S. steel industry will depend on multiple factors, including global trade negotiations, domestic demand and the resilience of American manufacturers facing higher input costs. If the tariffs successfully lead to greater investment in the U.S. steel space without triggering widespread economic fallout, they could mark the beginning of a new era for American steel.
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