Morgan Stanley Bullish on Duolingo: AI Integration Drives Optimistic Outlook

Morgan Stanley says this language learning stock can surge almost 30%

Morgan Stanley expects a rally ahead for Duolingo shares. Analyst Nathan Feather opened research coverage of the digital language learning platform with an investment rating of overweight. Feather's $435 price target suggests 29% upside from Tuesday's close and is a new high on Wall Street, according to LSEG. "Duolingo has the rare combination of rapid user growth, strong and expanding margins, and clear Gen AI upside," Feather wrote to clients in a note on Wednesday, adding that the company is a "best-in-class consumer internet asset." With his call, Feather joined the majority on Wall Street with buy-equivalent ratings, according to LSEG. Feather said Duolingo can combine mobile gaming and language learning, bringing its total addressable market to $220 billion. The company has only about 0.5% of that share currently, meaning it is "underpenetrated with a long runway for growth." Duolingo still monetizes about five times less than peers. But Feather said the launch of product-first subscriptions can help. In artificial intelligence, Feather said Duolingo is a "rare commodity" in the small- and mid-cap internet space because it's using generative AI to improve revenue and profits and has already demonstrated tangible benefits. Shares popped as much as 12.4% in early trading Wednesday on the heels of Feather's initiation of coverage. Earnings are due out on May 1. The stock has now added more than 13% in 2025, extending last year's rally of more than 40%. DUOL 1Y mountain Duolingo, 1-year chart Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!

Duolingo Stock Has a New Top Wall Street Bull. The Shares Are Rising Today

Analysts cited the company's user growth, strong and expanding margins, and generative AI features. Morgan Stanley analysts think Duolingo (DUOL) is speaking its language, setting a Street-high price target on the language learning company's stock. The analysts in a Wednesday note cited the company's "rare combination of rapid user growth, strong and expanding margins, and clear Gen AI upside" as reasons initiating an "overweight" rating and $435 price target well above Visible Alpha's mean around $383. Morgan Stanley said it believes Duolingo can see a 26% five-year revenue compound annual growth rate because it has a large market of language learners left to target. "We see DUOL as a best-in-class consumer internet asset," Morgan Stanley analysts said in the report. "Its unique, gamified approach to learning allows it to combine the mobile gaming and language learning markets for a $220B [total addressable market], of which it has just [about] 0.5% share." Analysts at Morgan Stanley also see potential for the app to earn more, as it currently monetizes at a lower rate than its competitors. Its Gen AI subscription tier Max, which is ad-free and allows users to role-play and have personalized explanations, plays a large role in the bank's growth projections. Shares of Duolingo were up about 10% in recent trading, ahead roughly 70% over the past 12 months.

Morgan Stanley starts Duolingo at 'overweight,' on strong growth By Investing.com

Investing.com -- Morgan Stanley initiated coverage of Duolingo (NASDAQ:DUOL) with an "Overweight" rating and a Street-high price target of $435 driven by a rapid user growth, strong margin expansion potential, and significant upside from generative AI tools. The brokerage said Duolingo's user base, now at about 117 million, represents only 5% of the estimated 2 billion global language learners, leaving room for sustained growth. Morgan Stanley (NYSE:MS) forecasts a 26% compound annual growth rate in revenue over the next five years. Duolingo's approach combines elements of mobile gaming and language education, giving it exposure to a $220 billion total addressable market where it currently holds less than 1% share. The firm said the company's gamified learning model, strong user engagement, and improving monetization form a durable "multi-faceted growth algorithm." "Duolingo has the rare combination of rapid user growth, strong and expanding margins, and clear Gen AI upside," the analysts wrote. Morgan Stanley sees Duolingo's operating leverage driving EBITDA margins from current levels to 40% by 2029, with a longer-term potential of exceeding 50%. It noted the company's focus on viral branding and limited marketing spend helps amplify profitability. Duolingo's Gen AI-powered Max subscription tier, including video call features, is starting to drive a meaningful revenue contribution. The note estimates Max revenue has increased tenfold in recent quarters to 6% of total revenue. The analysts believe this could represent a step-change in monetization if adoption continues. The $435 target reflects the midpoint between a $335 base case and $530 bull case. Despite its high valuation, the brokerage said Duolingo's growth outlook and AI potential justify the premium. Duolingo shares are down roughly 30% from recent highs but face no exposure to tariffs or significant macro risk, Morgan Stanley added.