Duolingo Stock Rallies as AI Investments Drive Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Fool
- Stock Recovery: Duolingo's stock has rallied over 20% in the past month, despite a more than 70% decline over the past year, indicating that investor interest in the current low price could signal a positive shift, potentially attracting more long-term investors.
- Course Expansion: Duolingo is not only focused on language learning but has also expanded into high-demand skills like chess, with the number of courses launched reaching 20,500 in Q1 2023, significantly up from an average of 7,100 per quarter in 2025, which will enhance user engagement and expand market share.
- Financial Growth: Despite a revenue growth rate decline from 40% to 27%, Duolingo achieved a 24% year-over-year net income growth in Q1, demonstrating the cost efficiency of its AI investments while maintaining a double-digit profit margin, indicating potential for sustainable growth.
- Long-Term Vision: Duolingo aims to reach 100 million daily active users by 2028; although short-term revenue growth is slowing, the freemium model will provide more opportunities to increase average revenue per user in the future, driving long-term financial growth.
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Analyst Views on DUOL
Wall Street analysts forecast DUOL stock price to rise
17 Analyst Rating
10 Buy
6 Hold
1 Sell
Moderate Buy
Current: 119.940
Low
160.00
Averages
260.36
High
330.00
Current: 119.940
Low
160.00
Averages
260.36
High
330.00
About DUOL
Duolingo, Inc. is a technology company. The Company is engaged in offering a mobile learning platform, as well as a digital English language proficiency assessment exam. It operates a freemium business model, namely, the app and the Website are accessible free of charge, although Duolingo also offers premium services for a subscription fee. Its solutions consist of the Duolingo App, Super Duolingo, Duolingo Max, Duolingo English Test: AI-Driven Language Assessment, Duolingo for Schools, and Duolingo ABC. The Duolingo App offers courses in over 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese and Chinese. Duolingo can also be accessed on desktop computers via a Web browser. Its subscription offering, Super Duolingo, offers learners additional features to enhance their learning experience. The Duolingo English Test is an online, on-demand, high-stakes English proficiency assessment. It also operates an animation and motion design studio.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Duolingo Expands Course Offerings to Boost User Growth
- User Growth Target: Duolingo aims to reach 100 million daily active users by 2028, seeking to reignite revenue growth through course expansion and enhanced subscription plans, despite a current stock price decline of over 70%.
- Course Content Expansion: The company utilized AI to publish 20,500 course units in Q1, nearly 11 times the 1,800 units per quarter in 2024, significantly increasing user options and driving revenue and net income growth.
- Financial Performance: Duolingo achieved a 27% revenue growth and a 24% net income growth in Q1, showing a slowdown compared to over 40% last year, yet maintaining a double-digit profit margin, indicating the cost efficiency of its AI investments.
- Subscription Service Improvement: By introducing a subscription-only video call feature, Duolingo doubled the average number of words spoken per user, enhancing the willingness to pay and supporting future revenue growth.
See More
Duolingo Stock Rallies as AI Investments Drive Growth
- Stock Recovery: Duolingo's stock has rallied over 20% in the past month, despite a more than 70% decline over the past year, indicating that investor interest in the current low price could signal a positive shift, potentially attracting more long-term investors.
- Course Expansion: Duolingo is not only focused on language learning but has also expanded into high-demand skills like chess, with the number of courses launched reaching 20,500 in Q1 2023, significantly up from an average of 7,100 per quarter in 2025, which will enhance user engagement and expand market share.
- Financial Growth: Despite a revenue growth rate decline from 40% to 27%, Duolingo achieved a 24% year-over-year net income growth in Q1, demonstrating the cost efficiency of its AI investments while maintaining a double-digit profit margin, indicating potential for sustainable growth.
- Long-Term Vision: Duolingo aims to reach 100 million daily active users by 2028; although short-term revenue growth is slowing, the freemium model will provide more opportunities to increase average revenue per user in the future, driving long-term financial growth.
See More
Investment Comparison: Adobe vs. Duolingo
- Adobe Financial Performance: In FY 2025, Adobe generated $23.8 billion in revenue, a 10.5% increase, with net income reaching $7.1 billion, reflecting strong demand in the digital experience software sector and boosting investor confidence.
- Duolingo User Growth: Duolingo's FY 2025 revenue hit $1.0 billion, a 38.7% increase, with net income of $414.1 million and a net margin of 39.9%, showcasing its success in expanding its user base and profitability.
- Risks and Uncertainties: Adobe faces operational uncertainty due to the departure of its CEO and CFO, along with a $150 million settlement over subscription practices, potentially impacting its market position; meanwhile, Duolingo's reliance on platform distribution exposes it to legal investigations and data privacy regulation challenges.
- Valuation Comparison: Adobe's forward P/E ratio stands at 8.0x, significantly lower than Duolingo's 44.3x, making Adobe an attractive investment choice despite leadership uncertainties due to its appealing valuation.
See More
Comparing Investment Prospects of Adobe and Duolingo
- Adobe Financial Performance: In FY 2025, Adobe generated $23.8 billion in revenue, reflecting a 10.5% increase, with net income reaching $7.1 billion, demonstrating strong demand and market leadership in digital experience software.
- Duolingo Rapid Expansion: Duolingo's revenue for FY 2025 hit $1.0 billion, a significant 38.7% increase, with a net income of $414.1 million, indicating its growing user engagement and profitability in the education sector.
- Market Competition Risks: Adobe faces uncertainty due to the departure of its CEO and CFO, alongside challenges from generative AI to maintain market share, while Duolingo relies heavily on platform distribution, facing high customer concentration and data privacy regulation pressures.
- Valuation Comparison: Despite Adobe's leadership uncertainty, its forward P/E ratio of 8 is significantly lower than industry benchmarks, indicating a relatively cheap valuation, while Duolingo's stock price decline due to market concerns has attracted investor interest.
See More
The Potential of Investing in Underperforming Stocks
- Adobe Financial Performance: Adobe's stock has plummeted 66% over the past five years, yet its latest quarterly revenue reached $6.6 billion, a 13% year-over-year increase, with projected annual revenue of $26.5 billion, indicating potential despite market skepticism about its future amid AI integration.
- Chewy Market Correction: Chewy's stock has fallen 77% over five years, but its recent earnings report showed net sales of $3.4 billion, up nearly 8%, and net income of approximately $95 million, reflecting solid performance in the pet product market, with a current P/E ratio of 12 making it an attractive investment.
- Duolingo User Growth: Duolingo's stock has nosedived over 70% in the past year, yet its daily active users surged 21% to 56.5 million in Q1 2026, with revenue rising 27% to $292 million, demonstrating strong financial health despite a slight dip in profit margin, highlighting its long-term investment potential.
- Market Reaction and Investment Opportunities: Despite the low stock prices of Adobe, Chewy, and Duolingo, investors should focus on their strong fundamentals and market potential, particularly in the realms of AI and online services, which may provide a solid foundation for future investment returns.
See More
Potential of Investing in Underperforming Stocks
- Adobe Stock Performance: Adobe's stock has plummeted 66% over the past five years and 48% in the last 12 months, currently trading at levels not seen since 2018; however, its latest quarterly revenue reached $6.6 billion, a 13% year-over-year increase, indicating strong underlying fundamentals.
- Chewy's Market Correction: Chewy's stock has fallen 77% over five years and 58% over the past year, yet its recent earnings report showed net sales of $3.4 billion, up nearly 8% year-over-year, with net income close to $95 million, a 52% increase, suggesting ongoing competitiveness in the pet product market.
- Duolingo's User Growth: Despite a more than 70% drop in Duolingo's stock over the past year, daily active users surged by 21% in Q1 2026 to 56.5 million, with revenue rising 27% to $292 million, reflecting success in user growth and product transformation.
- Investment Risks and Opportunities: While these stocks have underperformed, their fundamentals remain strong, with Adobe's future P/E at just 8, Chewy's forward P/E at 12, and Duolingo's at nearly 19, all below the S&P 500 average of 22, indicating potential as solid long-term investments.
See More
Duolingo Expands Course Offerings to Boost User Growth
- User Growth Target: Duolingo aims to reach 100 million daily active users by 2028, seeking to reignite revenue growth through course expansion and enhanced subscription plans, despite a current stock price decline of over 70%.
- Course Content Expansion: The company utilized AI to publish 20,500 course units in Q1, nearly 11 times the 1,800 units per quarter in 2024, significantly increasing user options and driving revenue and net income growth.
- Financial Performance: Duolingo achieved a 27% revenue growth and a 24% net income growth in Q1, showing a slowdown compared to over 40% last year, yet maintaining a double-digit profit margin, indicating the cost efficiency of its AI investments.
- Subscription Service Improvement: By introducing a subscription-only video call feature, Duolingo doubled the average number of words spoken per user, enhancing the willingness to pay and supporting future revenue growth.
See More
Duolingo Stock Rallies as AI Investments Drive Growth
- Stock Recovery: Duolingo's stock has rallied over 20% in the past month, despite a more than 70% decline over the past year, indicating that investor interest in the current low price could signal a positive shift, potentially attracting more long-term investors.
- Course Expansion: Duolingo is not only focused on language learning but has also expanded into high-demand skills like chess, with the number of courses launched reaching 20,500 in Q1 2023, significantly up from an average of 7,100 per quarter in 2025, which will enhance user engagement and expand market share.
- Financial Growth: Despite a revenue growth rate decline from 40% to 27%, Duolingo achieved a 24% year-over-year net income growth in Q1, demonstrating the cost efficiency of its AI investments while maintaining a double-digit profit margin, indicating potential for sustainable growth.
- Long-Term Vision: Duolingo aims to reach 100 million daily active users by 2028; although short-term revenue growth is slowing, the freemium model will provide more opportunities to increase average revenue per user in the future, driving long-term financial growth.
See More
Investment Comparison: Adobe vs. Duolingo
- Adobe Financial Performance: In FY 2025, Adobe generated $23.8 billion in revenue, a 10.5% increase, with net income reaching $7.1 billion, reflecting strong demand in the digital experience software sector and boosting investor confidence.
- Duolingo User Growth: Duolingo's FY 2025 revenue hit $1.0 billion, a 38.7% increase, with net income of $414.1 million and a net margin of 39.9%, showcasing its success in expanding its user base and profitability.
- Risks and Uncertainties: Adobe faces operational uncertainty due to the departure of its CEO and CFO, along with a $150 million settlement over subscription practices, potentially impacting its market position; meanwhile, Duolingo's reliance on platform distribution exposes it to legal investigations and data privacy regulation challenges.
- Valuation Comparison: Adobe's forward P/E ratio stands at 8.0x, significantly lower than Duolingo's 44.3x, making Adobe an attractive investment choice despite leadership uncertainties due to its appealing valuation.
See More
Comparing Investment Prospects of Adobe and Duolingo
- Adobe Financial Performance: In FY 2025, Adobe generated $23.8 billion in revenue, reflecting a 10.5% increase, with net income reaching $7.1 billion, demonstrating strong demand and market leadership in digital experience software.
- Duolingo Rapid Expansion: Duolingo's revenue for FY 2025 hit $1.0 billion, a significant 38.7% increase, with a net income of $414.1 million, indicating its growing user engagement and profitability in the education sector.
- Market Competition Risks: Adobe faces uncertainty due to the departure of its CEO and CFO, alongside challenges from generative AI to maintain market share, while Duolingo relies heavily on platform distribution, facing high customer concentration and data privacy regulation pressures.
- Valuation Comparison: Despite Adobe's leadership uncertainty, its forward P/E ratio of 8 is significantly lower than industry benchmarks, indicating a relatively cheap valuation, while Duolingo's stock price decline due to market concerns has attracted investor interest.
See More
The Potential of Investing in Underperforming Stocks
- Adobe Financial Performance: Adobe's stock has plummeted 66% over the past five years, yet its latest quarterly revenue reached $6.6 billion, a 13% year-over-year increase, with projected annual revenue of $26.5 billion, indicating potential despite market skepticism about its future amid AI integration.
- Chewy Market Correction: Chewy's stock has fallen 77% over five years, but its recent earnings report showed net sales of $3.4 billion, up nearly 8%, and net income of approximately $95 million, reflecting solid performance in the pet product market, with a current P/E ratio of 12 making it an attractive investment.
- Duolingo User Growth: Duolingo's stock has nosedived over 70% in the past year, yet its daily active users surged 21% to 56.5 million in Q1 2026, with revenue rising 27% to $292 million, demonstrating strong financial health despite a slight dip in profit margin, highlighting its long-term investment potential.
- Market Reaction and Investment Opportunities: Despite the low stock prices of Adobe, Chewy, and Duolingo, investors should focus on their strong fundamentals and market potential, particularly in the realms of AI and online services, which may provide a solid foundation for future investment returns.
See More
Potential of Investing in Underperforming Stocks
- Adobe Stock Performance: Adobe's stock has plummeted 66% over the past five years and 48% in the last 12 months, currently trading at levels not seen since 2018; however, its latest quarterly revenue reached $6.6 billion, a 13% year-over-year increase, indicating strong underlying fundamentals.
- Chewy's Market Correction: Chewy's stock has fallen 77% over five years and 58% over the past year, yet its recent earnings report showed net sales of $3.4 billion, up nearly 8% year-over-year, with net income close to $95 million, a 52% increase, suggesting ongoing competitiveness in the pet product market.
- Duolingo's User Growth: Despite a more than 70% drop in Duolingo's stock over the past year, daily active users surged by 21% in Q1 2026 to 56.5 million, with revenue rising 27% to $292 million, reflecting success in user growth and product transformation.
- Investment Risks and Opportunities: While these stocks have underperformed, their fundamentals remain strong, with Adobe's future P/E at just 8, Chewy's forward P/E at 12, and Duolingo's at nearly 19, all below the S&P 500 average of 22, indicating potential as solid long-term investments.
See More
