Duolingo's stock has experienced a significant surge following an updated forecast, driven by substantial user growth attributed to the integration of artificial intelligence. The language learning platform's shares jumped after exceeding expectations, with revenue climbing 41% to $252.3 million. Daily active users reached 47.7 million, a 40% increase, and paid subscribers rose to 10.9 million.
AI-powered features, such as video call practice and personalised feedback, are credited with enhancing user engagement and learning outcomes. The company's expansion into new areas, including music and chess, has also contributed to its growth. Duolingo's strategic shift towards AI-driven content creation and user engagement has resulted in a 73% gross margin.
Duolingo has raised its full-year revenue guidance to between $1.011 billion and $1.019 billion. Analysts project a 26% compound annual growth rate through 2030, though some caution about valuation risks. JPMorgan has raised its price target for Duolingo to $515, citing GenAI innovation and increased monetisation.
