What Happened?

Shares of language-learning app Duolingo (NASDAQ: DUOL) fell 3% in the afternoon session after Google announced new artificial intelligence-powered live translation and language learning tools, signaling a potential threat to Duolingo's market position. 

The new features, integrated into Google Translate, include a language practice tool that uses Gemini AI models to create customized listening and speaking sessions adapting to a user's skill level. Google's enhancement of its free language learning offerings with these advanced AI tools represents increased competition for Duolingo, which has built its business around gamified language learning applications. Investors appear concerned that the tech giant's move into more sophisticated language education could challenge Duolingo's growth and user base.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Duolingo? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Duolingo’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 3.2% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. 

A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed. 

Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.

Duolingo is down 2.4% since the beginning of the year, and at $318.15 per share, it is trading 41.2% below its 52-week high of $540.68 from May 2025. Investors who bought $1,000 worth of Duolingo’s shares at the IPO in July 2021 would now be looking at an investment worth $2,289.

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