The tech industry's top-performing stock, AppLovin, experiences another 45% increase in value following a successful earnings report.

• On Thursday, AppLovin's stock price surged after the company released better-than-expected earnings and revenue, along with guidance that exceeded estimates.
• The stock experienced a 45% increase, resulting in a yearly gain of more than 500%.
• The company stated in a letter to shareholders that as we enhance our models, our advertising partners are able to effectively increase their spending.

On Thursday, shares of the online gaming and advertising company surged 45% after the company released guidance that exceeded expectations and reported stronger-than-anticipated earnings and revenue.

In early afternoon trading, the stock surpassed $245, reaching a 515% increase in value this year, surpassing all other tech companies valued at $5 billion or more, according to FactSet data. As a result, AppLovin's market cap has soared above $80 billion.

In the third quarter, LSEG reported revenue growth of 39% to $1.2 billion, surpassing the average estimate of $1.13 billion. Additionally, the company's earnings per share came in at $1.25, which was higher than the 92-cent average estimate.

The company expects to generate revenue of $1.24 billion to $1.26 billion in the fourth quarter, which represents growth of approximately 31% at the midpoint of the range. Analysts had forecasted revenue of about $1.18 billion.

In 2021, AppLovin, founded 12 years ago, went public, experiencing growth in online games due to the Covid-19 pandemic. However, the company's games unit now generates slow growth, while its online ad business thrives from advancements in artificial intelligence that enhance ad targeting.

The growth of AppLovin can be attributed to its AI advertising engine, AXON 2.0, which targets ads on mobile gaming apps owned by the company and is also licensed by other studios.

In the quarter, the software platform revenue of the company increased by 66% to $835 million, due to enhancements in AXON's models.

The company stated in a letter to shareholders that as we enhance our models, our advertising partners are able to effectively increase their spending.

Despite the rapid growth of revenue, Wall Street is most drawn to AppLovin's profitability. In the latest quarter, the company's net income increased by 300% to $434.4 million, or $1.25 a share, from $108.6 million, or 30 cents a share, in the previous year. The software platform's adjusted profit margin stood at 78%.

Analysts at Wedbush wrote in a report on Thursday that AppLovin continues to impress with outsized revenue growth and incredible EBITDA conversion. They recommend buying the stock and increased their price target from $170 to $270.

Adam Foroughi, CEO of AppLovin, whose net worth increased by over $2 billion on Thursday to approximately $7.4 billion, shared information about the company's pilot e-commerce project that utilizes technology to deliver targeted advertisements within games.

"Foroughi stated on the earnings call that the product released by us is the best he has ever seen, despite being in the pilot stage. He added that e-commerce is growing rapidly and will have a significant impact on the business financially in 2025 and beyond."

— CNBC's CJ Haddad contributed to this report

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