By Doug Busch

AppLovin's earnings, and how the stock responds, are a test case for whether Friday's turnaround in software stocks can continue. The charts indicate the shares could be heading higher.

The iShares Expanded Tech-Software Sector exchange-traded fund sold off aggressively last week as fear that artificial intelligence models will devastate the businesses of software makers. But recent rebounds suggest those worries may have been overdone.

Earnings reactions Tuesday morning from Datadog and Spotify have been encouraging: Both stocks leapt 17% in early trading. Shopify and Unity report before the open on Wednesday, while HubSpot and AppLovin report after the close.

AppLovin's earnings are particularly important. As the sixth-largest holding in the tech ETF, AppLovin has the potential to give it a boost. It is a widely watched stock, and it has achieved a positive earnings reaction in eight consecutive quarters and has advanced following 12 of the past 13 reports.

Given that, a decline in the shares would be a negative, though the impact would be blunted by gains in other tech stocks, such as Datadog and Spotify.

The AppLovin daily chart shows nascent weakness versus software peers since the start of 2026, as shown by the ratio chart against the iShares Expanded Tech-Software ETF. The stock is down 31% year to date, even after a combined 22% gain over the past two sessions.

What stands out is an impressive bullish island reversal completed Monday via a gap higher, following a 16% gap down on Feb. 4. This move also marked a successful retest of the $429.09 cup base pivot that was cleared on Aug. 7, triggering a 12% advance at the time. Notably, that same cup base had previously retested a double bottom breakout pivot at $352.10 from May 13.

This is the type of price behavior seen in stocks of leading companies.

Barron's believes the stock is carving out the right side of a potential double bottom base, a process that began with three consecutive doji candles that preceded a nearly $400 pullback.

AppLovin was up about 2% at $470.37 on Tuesday morning.

The weekly chart going back to the stock's initial public offering in April 2021, shows the 50-week simple moving average has been tested twice before. Both times, it acted as a powerful launchpad. In August 2024, a bullish piercing line candle off the 50-week average sparked a rally from $60 to $525 by February 2025, where a bearish dark cloud cover signaled an important near-term peak.

Over the next two months, the stock retraced all the way back to the very round $200 level, once again finding support at the 50-week simple moving average. From there, it rocketed to $745, a 275% gain, before another doji candle indicated that surge had run out of steam. Now, the stock has once again pulled back to its 50-week simple moving average for a third test. Déjà vu?

Earnings will provide the answer, but the price action suggests the risk may be skewed to the upside.

Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 10, 2026 11:59 ET (16:59 GMT)

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