Investing.com -- JP Morgan reiterated Duolingo (NASDAQ: DUOL ) as its “Best Idea” in online education ahead of the company’s first-quarter earnings on May 1, citing strong user growth, deepening monetization, and improving margin outlook in the second half of 2025.

The firm remains bullish on Duolingo’s daily active user growth, projecting a 45% year-over-year increase in Q1, supported by product improvements, marketing campaigns, and a healthy demand environment. Sensor Tower data suggests Q1 DAUs rose 41% Y/Y.

JP Morgan highlighted the potential of Duolingo Max and Family plans to drive deeper monetization in 2025, with Max subscriptions expected to triple to 1.37 million, accounting for 11% of total subscribers and generating $177 million in bookings.

While AI-related costs are expected to pressure first-half margins, the firm said Duolingo is managing these expenses through LLM diversification and optimization efforts.

It forecasts a rebound in margins later in 2025 and sees upside to current bookings and EBITDA guidance.

The bank maintained its Overweight rating and $360 December 2025 price target, based on ~41x free cash flow.