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On Monday, DA Davidson provided insights into the current state of artificial intelligence (AI) integration within the game development industry, following the 2025 Game Developers Conference. Analyst Wyatt Swanson observed that despite high interest in AI, as evidenced by packed speaker sessions, the actual use of AI in game development workflows remains minimal. Take-Two Interactive Software (ETR:SOWGn) (TTWO), currently rated as a BUY by analysts with a consensus target suggesting 28% upside potential according to InvestingPro data, exemplifies this industry-wide cautious approach to AI adoption.
At the conference, it was noted that AI-related sessions were filled to capacity, with many attendees waiting in line, indicating a strong interest in the technology among game developers. However, a quick poll during one of the sessions revealed that less than 10% of the audience had incorporated AI into their development processes.
Swanson suggests that the adoption of AI in game development is likely to increase over time as developers explore and identify effective solutions. He emphasized that finding the right AI tools that enhance productivity and development speeds is a priority for the industry.
A speaker from NaturalMotion, a subsidiary of Take-Two Interactive Software (NASDAQ:TTWO), which holds a BUY rating, shared that the integration of AI into game development is not imminent. The focus, according to the speaker, should be on prioritizing the player experience over adopting AI technologies prematurely.
The analyst concluded that the game development cycle is expected to remain extended or even lengthen until AI can be implemented effectively and at a reasonable cost. There is a need for AI solutions that not only fit within budgets but also demonstrate efficiency improvements across various projects. For now, Take-Two Interactive’s stock remains stable as the industry continues to explore the potential of AI in game development.
In other recent news, Duolingo (NASDAQ:DUOL) Inc. reported a strong fourth-quarter performance for 2024, with revenue reaching $209.6 million, surpassing the forecast of $205 million. Despite this positive outcome, the company’s stock fell by over 7% in aftermarket trading. Analysts from JPMorgan, DA Davidson, Needham, and Piper Sandler have all revised their price targets for Duolingo, reflecting confidence in the company’s growth potential. JPMorgan raised its target to $410, highlighting the potential of Duolingo’s AI-driven product cycle, particularly its feature Max, which is expected to triple its paid subscriber base. DA Davidson and Needham both increased their price targets to $400, citing Duolingo’s impressive growth in daily active users and subscription bookings. Piper Sandler set its new target at $390, noting the company’s significant bookings growth and the strong uptake of its premium offering, Duolingo Max. These developments underscore Duolingo’s strategic initiatives and robust market presence as it continues to expand its offerings and enhance its AI capabilities.
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