Evercore Turns Bullish on Duolingo Stock as AI Fears Fade

Duolingo (DUOL) stock moved up following an upgrade from Evercore ISI from "In Line" to "Outperform" as well as a price target increase to $210 from $105. Evercore noted that Duolingo appears to be doing fine amid the emergence of generative AI, which has been considered potentially disruptive to demand for stand-alone language learning apps.

The report revealed that, out of 1,300 U.S. language learners surveyed by Evercore, 53% used Duolingo compared to only 13% using the closest pure-play competitor, Babbel. At the same time, 66% of respondents reported that they felt very satisfied using the platform. Notably, Duolingo has also been growing its number of daily active users while adding AI to its app.

Based in Pittsburgh, Pennsylvania, Duolingo is engaged in operating one of the world's largest mobile learning platforms, with the main product of the company being its language-learning app. Duolingo uses a freemium business model, in which it generates revenue by monetizing free users and converting them to paid subscriptions. Currently, the market capitalization of the company is $7.4 billion.

Shares of DUOL stock have experienced a dramatic reset in value. Despite the fact that DUOL stock currently trades near $154, shares are still 56% off the 52-week high of $353, although they are up 75% from the 52-week low of $87.8. Duolingo has also performed poorly relative to the broader market over the last 12 months; the S&P 500 Index ($SPX) has gained 19% during this time frame versus Duolingo stock's drop of 43%.

That drop in value has not automatically made Duolingo a good value stock, however. The forward price-to-earnings (P/E) ratio is 60.1 times, while the price-to-sales (P/S) ratio is 7.1 times. This is quite a steep valuation, and in order to justify such a stock price, Duolingo needs to demonstrate consistent growth in users as well as future earnings. Of course, DUOL stock is not as expensive as it used to be, but it is still far from being a cheap stock with a margin of safety.

The most recent results reported by Duolingo confirmed this growth story. Revenue reached $298.5 million in Q2 2026, increasing 18% year-over-year (YOY) and beating expectations of $295.9 million. Total bookings grew 8% YOY to $289.1 million, while diluted EPS reached $0.66 and beat estimates of $0.61. Net income fell approximately 26% YOY to $33.2 million as the company invested in its growth.