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Duolingo Raises 2025 Revenue Forecast as AI Features Boost User Growth

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Duolingo (DUOL.O) raised its annual revenue forecast and surpassed second-quarter revenue estimates on Wednesday, driven by increased adoption of its AI-enhanced subscription services. The language-learning app’s shares climbed about 20% in after-hours trading.

Operating on a freemium model, Duolingo offers free basic lessons with premium tiers that provide advanced features through monthly or annual subscriptions. The company now expects 2025 revenue between $1.01 billion and $1.02 billion, surpassing analysts’ consensus of $996.6 million. Previously, the forecast ranged from $987 million to $996 million.

For the April-June quarter, revenue reached $252.3 million, beating analysts’ estimates of $240.7 million.

Duolingo’s two subscription tiers, Super and Max, include AI-powered tools like video-call conversation practice with chatbots, personalized error analysis, and improved feedback. Since launching its AI video-call feature on Android in January, the company has expanded it to more languages to enhance natural conversation practice and drive subscription growth.

The company’s gross margin exceeded expectations this quarter due to lower-than-anticipated AI costs and stronger ad performance, which, while a smaller part of the business, contributed positively to margins, CFO Matt Skaruppa said.

Duolingo uses generative AI to craft and personalize lessons across more than 100 languages. CEO Luis von Ahn noted that after 12 years to develop its first 100 courses, AI tools helped launch 148 new courses in about one year.

Looking ahead, Duolingo expects third-quarter revenue between $257 million and $261 million, exceeding analyst forecasts of $253 million, and projects adjusted core profit for 2025 in the range of $288.1 million to $295.5 million.

OpenAI’s GPT-5 Model Nears Release Amid High Expectations

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OpenAI is on the brink of releasing GPT-5, the next-generation language model succeeding GPT-4, which powered the ChatGPT phenomenon starting in 2022. Industry insiders and early testers express cautious optimism, praising its enhanced coding and scientific problem-solving capabilities, though some say the leap from GPT-4 to GPT-5 feels less dramatic compared to the jump from GPT-3 to GPT-4.

OpenAI, backed by Microsoft and currently valued at around $300 billion, has faced challenges scaling GPT-5 due to limitations in available training data and increased complexity in training runs that can last months and are prone to hardware failures. Unlike GPT-4, which saw significant gains through increased compute power and data, GPT-5 incorporates a novel approach called “test-time compute,” directing extra processing power dynamically to solve complex reasoning and decision-making tasks.

Since the debut of ChatGPT nearly three years ago, generative AI has rapidly advanced. GPT-4 notably outperformed its predecessor by passing the simulated bar exam in the top 10%, setting a new standard in AI capabilities. Meanwhile, competitors like Google and Anthropic have developed rival models, and open-source initiatives such as Meta’s Llama 3 have narrowed the performance gap.

OpenAI CEO Sam Altman noted earlier in 2025 that GPT-5 would blend traditional large model training with test-time compute techniques, reflecting the company’s increasingly sophisticated and multifaceted AI portfolio. The broader AI industry awaits the release with anticipation, expecting GPT-5 to unlock new applications beyond conversational AI toward fully autonomous task execution.

Amazon eyes deeper investment in Anthropic to stay ahead in AI race

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Amazon is reportedly considering another multibillion-dollar investment in Anthropic, the artificial intelligence firm behind the Claude AI models, according to the Financial Times. The potential move would strengthen Amazon’s position as a major player in the rapidly intensifying global AI race.

The report, citing sources familiar with the matter, says Amazon wants to expand on the $8 billion investment it committed to Anthropic in November 2023. That initial deal, which included an upfront $4 billion, made Amazon one of the company’s largest stakeholders, alongside Google, which has invested more than $3 billion into Anthropic.

Both Amazon and Anthropic declined to comment on the renewed talks when contacted by Reuters.

A race to stay relevant in AI

Amazon’s increasing interest in Anthropic highlights its urgency to catch up to rivals OpenAI and Google, who have made significant consumer-facing advances in generative AI over the past two years. Anthropic’s Claude family of AI models competes directly with OpenAI’s ChatGPT and Google’s Gemini.

“We quickly realized that we had many shared goals that were fundamentally critical,” said Dan Grossman, Amazon’s VP of worldwide corporate development. “The size of the (existing investment) represents our ambition.”

Amazon’s deepened partnership with Anthropic could also help it attract top AI talent, an increasingly competitive space where companies are offering equity, massive compensation packages, and research freedom to lure leading minds in machine learning and large language models.

Strategic implications

Amazon’s AI ambitions are closely tied to its cloud business, AWS, where Anthropic’s models are being integrated into services for enterprise customers. The ongoing partnership gives Anthropic priority access to AWS’s Trainium and Inferentia chips, optimizing both model development and deployment.

Beyond infrastructure, Amazon is aiming to embed Claude-powered AI tools deeper into Alexa, Amazon Web Services, and its e-commerce ecosystem, which could give it an edge in personalized search, voice interfaces, and customer service automation.

The prospective increase in funding would also help Amazon maintain equity leadership in Anthropic amid growing investor interest in the startup. With AI startups commanding soaring valuations, Amazon appears determined not to lose strategic control over a potential future titan in the field.