Duolingo (NASDAQ: DUOL) shares climbed more than 5% on Tuesday after Evercore ISI upgraded the language-learning platform to Outperform from In Line and doubled its price target to $210, implying roughly 42% upside from the prior close. The bullish call comes as the company leans into artificial intelligence to boost user engagement and subscriber growth.
Evercore sees AI as a growth catalyst
Evercore analyst Mark Mahaney highlighted a recent survey showing Duolingo has about four times the selection of its nearest pure-play competitor. The survey also indicated that user satisfaction and daily usage have improved, with daily usage rising to 65% in 2026 from 61% in 2025. Mahaney attributed the uptick to recent AI-linked product changes, including spoken tokens, Flashcards, and Speaking Adventures—a free lesson format where learners complete real-world tasks by interacting with Duolingo characters.
The company also reported a record current user retention rate of 84%, up about one percentage point year over year, according to Evercore. Mahaney argued that generative AI tools are unlikely to significantly disrupt Duolingo's business, noting that ChatGPT users interested in language learning are primarily focused on travel—an area Duolingo de-emphasizes because it is harder to monetize.
DA Davidson raises target on strong user data
DA Davidson also turned more optimistic, raising its price target to $175 from $160 while maintaining a Buy rating. Analyst Wyatt Swanson based the update on proprietary tracking of more than 170,000 existing Duolingo users. The data showed continued strength in week-over-week daily active user (DAU) growth, with the final week of August recording another increase. DA Davidson estimates third-quarter DAU growth could land between 25.6% and 27.6% year over year.
August DAUs rose 1.3% month over month, compared with 0.6% in the firm's previous update. The week from Aug. 22 to Aug. 29 saw 1.8% week-over-week growth, the strongest weekly increase since Duolingo's streak revival event in early June. Growth came from both returning older users and new users from more recent cohorts.
Wall Street remains split
DA Davidson's new $175 target represents 23.5 times its 2026 EBITDA estimate and 18.5 times its 2027 estimate. The firm also noted that its DAU data has historically underestimated Duolingo's reported results by 100 to 200 basis points.
Despite the positive calls, broader analyst sentiment remains cautious. LSEG data shows that 17 of the 25 analysts covering Duolingo have a Hold rating. The contrasting views reflect the ongoing debate over Duolingo's ability to sustain user and paid subscriber growth while navigating the impact of generative AI on language learning.
For now, recent engagement data and the company's expanding portfolio of AI-enabled products have provided a more positive backdrop for the shares, even as Duolingo remains below its levels at the start of the year. Investors may also be watching broader tech trends, as seen in Nvidia's recent surge and Okta's record high, which highlight the market's appetite for AI-driven growth stories.
This article is for informational purposes only and does not constitute financial advice.
