Duolingo is expected to recover as it embraces artificial intelligence to enhance user engagement and expand its market share, according to Evercore ISI. The firm raised its price target for Duolingo from $105 to $210, suggesting a potential upside of nearly 42% from its recent trading price.
Analyst Mark Mahaney highlighted that Duolingo now offers approximately four times the selection of its nearest competitor, which is a significant advantage. The firm's survey indicates that user satisfaction and daily usage are on the rise, with daily usage projected to increase from 61% in 2025 to 65% in 2026.
Despite a year-to-date decline of over 10% in its stock price, Duolingo's introduction of AI-enabled features like spoken tokens and Speaking Adventures is expected to enhance user engagement and retention, which has reached a record high of 84%.
Mahaney believes that the rise of generative AI tools will not negatively impact Duolingo, as its primary user base is less focused on travel-related language learning, a segment that is harder to monetize. This optimistic outlook contrasts with the broader market sentiment, where 17 out of 25 analysts maintain a hold rating on the stock