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Investing.com - Morgan Stanley (NYSE:MS) has reiterated its Overweight rating and $500.00 price target on Duolingo Inc. (NASDAQ:DUOL) following OpenAI’s demonstration of language learning tools in its GPT-5 release. The language learning platform has demonstrated robust financial performance, with revenue growing 39% year-over-year and maintaining impressive gross margins of 72%. According to InvestingPro data, the company’s overall financial health is rated as GOOD.
The firm addressed investor concerns about potential competitive threats to Duolingo’s business model after OpenAI showcased various language learning capabilities in its latest artificial intelligence model.
Morgan Stanley dismissed these worries, stating that market reactions "miss DUOL’s competitive advantages & moat" in the language learning space.
The investment bank highlighted that Duolingo stands out as "one of the few SMID internet companies already leveraging Gen AI across its business," suggesting the company is well-positioned in the AI landscape.
Morgan Stanley further noted that improved AI models could actually benefit Duolingo by accelerating its "development flywheel, enabling persistent improvements across KPIs & deepening the moat" rather than threatening its market position.
In other recent news, Duolingo reported strong quarterly results, with bookings surpassing expectations by 9%. This performance was supported by foreign exchange benefits, advertising revenue, and the success of its Super subscription plans. The company’s adjusted EBITDA exceeded forecasts by 29%, showcasing solid financial results. Analysts have responded positively to these developments. JPMorgan raised its price target for Duolingo to $515, citing innovations in generative AI and increased monetization of the Max subscription tier. DA Davidson maintained its Buy rating with a $500 target, while Needham reiterated a Buy rating with a $460 price target, highlighting strong subscriber growth and ARPU expansion. Wolfe Research and Raymond (NSE:RYMD) James both maintained their respective Peerperform and Market Perform ratings, acknowledging Duolingo’s robust second-quarter performance and improved outlook for the latter half of 2025. These analyst insights reflect confidence in Duolingo’s continued growth and innovation.
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