I Bought This Growth Stock When Everyone Else Was Selling, and It's Starting to Pay Off

I have followed Duolingo (NASDAQ: DUOL) stock since it went public in 2021, but I didn't actually buy it until March of this year. It was down by more than 79% from its June 2025 record high when I decided to dive in at a time when most investors were fretting over two potential headwinds for its business.

Duolingo operates the world's largest digital language education platform. Management recently announced a plan to focus on user growth for the next couple of years, which has already caused a slowdown in the company's revenue and earnings growth. At the same time, there have been concerns that artificial intelligence (AI) could disrupt the platform's success.

Personally, I think Duolingo's renewed focus on user acquisition will yield significant long-term rewards for shareholders, and I also believe AI will be a tailwind, not a threat, to its business. The stock has already jumped 25% from my initial purchase price of around $90, and while it's way too early to declare victory, here's why I think significantly more upside could be ahead.

AI is enhancing the learning experience

Duolingo's success stems from its mobile-first approach, which puts language education at the fingertips of practically anyone with a smartphone. Plus, its gamified and highly interactive lessons keep learners engaged, which is the key to monetizing them over the long term.

Duolingo had 56.5 million daily active users at the conclusion of the first quarter of 2026 (ended March 31), which was up 21% compared to the year-ago period. The majority of them were free users who Duolingo monetizes through advertising, but 12.5 million of them were paying a subscription fee to unlock additional features to accelerate their learning.

While some investors believe new AI-powered translation tools will make Duolingo's platform obsolete, the company is proving it can use this new technology to its advantage.

In 2024, it launched a new feature called Video Call, which is only available to users who pay for a Super Duolingo or Duolingo Max subscription. It uses an AI-powered digital avatar to help users practice their foreign language speaking skills, and during the first quarter, the average number of spoken words per user who engaged with the feature more than doubled compared to the year-ago period. In other words, Video Call is already a massive tailwind for engagement.