Jefferies Urges Selectivity on Duolingo (DUOL) as AI Disintermediation Risks and High Spending Threaten 2026 Valuations

Duolingo Inc. (NASDAQ:DUOL) is 1 of the best NASDAQ stocks to bargain successful 2026. On December 11, Jefferies raised the firm’s terms people connected Duolingo to $220 from $210 and maintained a Hold standing connected the shares. In the firm’s 2026 Internet Playbook report, Jefferies advised investors to beryllium highly selective with Internet stocks and warned that continued dense spending connected maturation could compression nett margins. Furthermore, concerns that AI mightiness disintermediate accepted net services could forestall banal valuations from rising, arsenic these shifts endanger the semipermanent dominance of existing platforms.

On December 3, DA Davidson lowered the firm’s terms people connected Duolingo to $205 from $220 and maintained a Neutral standing connected the shares. The steadfast informed investors that data, which is tracking astir 170K existing users, reveals sequential improvements successful progressive idiosyncratic numbers for October and November compared to the 3rd quarter. However, the steadfast noted that contempt Duolingo’s strategical enlargement into the chess market, determination has been nary important surge successful Chess.com’s idiosyncratic maturation truthful far.

Duolingo Inc. (NASDAQ:DUOL) highlighted a 34% year-over-year summation successful regular progressive users successful Q3 2025. The institution is connected way to scope astir $1.2 cardinal successful bookings for the afloat year, representing a 33% yearly maturation rate. The company’s enlargement into Asia has reached a important milestone, with China present serving arsenic its second-largest marketplace successful presumption of regular progressive users.

A superior operator of caller occurrence is the company’s diversification beyond connection learning. The caller chess people has go Duolingo’s fastest-growing offering, exceeding the maturation rates of some its mathematics and euphony courses. Millions of users person already engaged with the chess content, which boasts retention rates somewhat higher than the halfway connection products. To further thrust engagement, Duolingo is rolling retired a Player-vs-Player feature, which is presently disposable to 50% of iOS users with an Android merchandise and afloat rollout expected successful the coming weeks.

Despite the affirmative momentum, Duolingo expects immoderate deceleration successful DAU maturation during Q4, with September and October showing year-over-year maturation of ~30% compared to the 34% seen successful Q3.

Duolingo Inc. (NASDAQ:DUOL) operates arsenic a mobile learning level successful the US, the UK, and internationally. The institution offers courses successful 40 antithetic languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese, done its Duolingo app.

While we admit the imaginable of DUOL arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you’re looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.