Duolingo posts robust profits and growth, while Zeta Global leverages AI for enterprise marketing, but each faces distinct risks and valuation profiles.
Duolingo has been expanding into other subjects to offer a broader learning experience. The company has used AI to create more courses and enhance its subscription plans.
Adobe remains a dominant force in creative software, generating nearly $9.9 billion in annual free cash flow. Duolingo is expanding rapidly beyond languages into math and music with a highly profitable freemium business model.
The stocks on this list trade at discounts to the S&P 500 average. They have been struggling, and their shares are down more than 48% in just the past year.
Duolingo is rated Strong Buy, trading at 12x earnings and a 0.28x forward PEG, with robust free cash flow and no debt. DUOL's DAUs have grown 350% post-ChatGPT, reaching 56.5 million, with 22% conversion to paid users and a powerful, sticky brand. Despite sector-wide SaaS drawdown, DUOL's AI-driven growth, 35% free cash flow margins, and a $1.1 billion cash position underscore its asymmetrical risk/reward profile.