Duolingo Shares Decline Amid Google’s AI Challenge

Shares of language-learning app Duolingo (NASDAQ:DUOL) fell 7.3% as Google introduced new AI-powered language learning tools, increasing competition. This move poses a significant challenge to Duolingo's market position and user engagement model.

Google's entry into the language-learning space raises concerns among investors about Duolingo's future growth prospects and its ability to compete with a major corporation. The stock market often overreacts to news, and significant price drops can present opportunities to buy high-quality stocks.

Duolingo's shares are highly volatile, with 35 moves greater than 5% over the past year. Today's move indicates the market sees this news as important but not fundamentally altering its business perception.

Three days ago, the stock dropped 3% following news of Google's AI-powered translation and language tools. These features, integrated into Google Translate, offer customized sessions using Gemini AI models. Google's enhancements represent increased competition for Duolingo.

Duolingo is down 8.3% since the start of the year, trading at $298.87 per share, 44.7% below its 52-week high of $540.68 in May 2025. An investment of $1,000 at the IPO in July 2021 would now be worth $2,150.