10 Best Adtech Stocks to Buy According to Hedge Funds

In this article, we discuss 10 best adtech stocks to buy according to hedge funds.

Although there is weakness in the ad market driven by an uncertain economic outlook and expectations that a potential recession will crush consumer demand, ad-tech stocks remain comparatively resilient. This is because marketers are now more selective with their advertising budget, which means they are looking to spend those ad dollars efficiently. They now rely more on data and technology when it comes to marketing their products and services. Ad-tech firms are also benefiting from the transformation of ad spending from linear TV to connected TV. 

In the beginning of December, media buyer GroupM forecast that traditional TV ad spending would decline by 3.8% to $64.4 billion in 2023, with the drop offset by a 19% increase in ad spending on connected TV to $13.3 billion. The media buyer sees a similar pattern in 2024 and 2025 as well, while CTV spending will accelerate by 1.8% to $20 billion by 2026. 

Jeff Green, founder and CEO at The Trade Desk, Inc. (NASDAQ:TTD), announced that his company’s revenues rose 31% in the third quarter of 2022. In an earnings call, he said: 

“It is very clear that under the current operating conditions, we are significantly outpacing the market regardless of the macro environment.” 

Some of the best adtech stocks to invest in include The Interpublic Group of Companies, Inc. (NYSE:IPG), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG). 

Our Methodology 

We selected the following adtech stocks using overall hedge fund sentiment towards each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. We also talked about positive analyst coverage, strong business fundamentals, and market visibility.

Allen.G/Shutterstock.com

Best Adtech Stocks To Buy According To Hedge Funds

10. fuboTV Inc. (NYSE:FUBO)

Number of Hedge Fund Holders: 9

fuboTV Inc. (NYSE:FUBO) is a New York-based live TV streaming platform for live sports, news, and entertainment content in the United States and internationally. Its fuboTV platform offers access to content through streaming devices like SmartTVs, computers, mobile phones, and tablets. fuboTV Inc. (NYSE:FUBO) allows businesses to run their ads on its premium content. 

On December 21, fuboTV Inc. (NYSE:FUBO) shares climbed after the company announced that it had signed a deal with Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) to bring its “19 Bally Sports” regional sports networks to Fubo’s platform “in the coming weeks.” On December 20, fuboTV Inc. (NYSE:FUBO) also agreed to a multi-year distribution partnership with Scripps Networks, the national television network division of The E.W. Scripps Company (NASDAQ:SSP). 

Needham analyst Laura Martin on December 23 maintained a Buy recommendation on fuboTV Inc. (NYSE:FUBO) but lowered the firm’s price target on the shares to $3 from $4.50. fuboTV Inc. (NYSE:FUBO) represents an inexpensive way for investors to participate in the U.S. consumer shift toward OTT and Streaming TV, the analyst told investors in a research note.

According to Insider Monkey’s third quarter database, 9 hedge funds were bullish on fuboTV Inc. (NYSE:FUBO), with collective stakes worth $21.6 million. Paul Marshall and Ian Wace’s Marshall Wace LLP is a significant position holder in the company, with nearly 3 million shares worth $10.5 million. 

Like The Interpublic Group of Companies, Inc. (NYSE:IPG), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG), fuboTV Inc. (NYSE:FUBO) is one of the top adtech stocks to invest in. 

Here is what Bireme Capital specifically said about fuboTV Inc. (NYSE:FUBO) in its Q2 2022 investor letter:

“In contrast, we don’t foresee fuboTV Inc. (NYSE:FUBO) finding a profitable business model. The company, which operates a streaming TV service, still has negative gross margins and in 2021 generated over $300m in operating losses. This company may end up in bankruptcy, given that it already carries around $400m of debt and looks set to burn over $300m of cash this year. The stock has fallen from $26 when we last mentioned it to $2.60 today. We remain short.”

9. PubMatic, Inc. (NASDAQ:PUBM)

Number of Hedge Fund Holders: 12

PubMatic, Inc. (NASDAQ:PUBM) is a California-based company providing a cloud infrastructure platform that allows real-time programmatic advertising transactions for internet content creators and advertisers worldwide. On November 21, PubMatic, Inc. (NASDAQ:PUBM) announced that it has entered into a supply path optimization partnership with U.S. media agency Horizon Media. Horizon Media chose PubMatic, Inc. (NASDAQ:PUBM) as an exclusive partner to provide advertisers with data-driven advertising at scale. It is one of the best adtech stocks to buy now. 

On December 15, Oppenheimer analyst Jason Helfstein maintained an Outperform rating on PubMatic, Inc. (NASDAQ:PUBM) but lowered the firm’s price target on the shares to $22 from $23 after refreshing his model to factor in higher headcount flowing through FY 2023, 3% to 5% cost of living increases, and the return of the 1Q Global Sales event, which trims his FY23 and FY24 EBITDA estimates by 7% and 6%, respectively.

According to Insider Monkey’s data, PubMatic, Inc. (NASDAQ:PUBM) was part of 12 hedge fund portfolios at the end of Q3 2022, with collective stakes worth $26.6 million, compared to 26 funds in the prior quarter worth $22 million. Jim Simons’ Renaissance Technologies held the biggest position in the company, comprising 754,100 shares worth $12.5 million. 

8. Integral Ad Science Holding Corp. (NASDAQ:IAS)

Number of Hedge Fund Holders: 15

Integral Ad Science Holding Corp. (NASDAQ:IAS) is a New York-based digital advertising verification company operating in the United States, the United Kingdom, Germany, Italy, Spain, Sweden, Singapore, Australia, France, Japan, Canada, India, and Brazil. The company provides a cloud-based technology platform that offers actionable insights, independent measurement, and verification of digital advertising across different devices, channels, and formats. Integral Ad Science Holding Corp. (NASDAQ:IAS) is one of the best adtech stocks to invest in.

On December 15, Integral Ad Science Holding Corp. (NASDAQ:IAS) announced a first-to-market partnership with Gadsme, a premium in-game advertising platform. The partnership will allow Integral Ad Science Holding Corp. (NASDAQ:IAS) to verify Gadsme ad inventory worldwide and provide marketers with third-party viewability and invalid traffic measurement via the IAS Signal platform.

Jefferies analyst James Heaney on December 15 maintained a Buy rating on Integral Ad Science Holding Corp. (NASDAQ:IAS) with an unchanged $12 price target. In his view, the Street is “overly optimistic” on digital advertising growth in 2023 and 2024. However, he would buy Integral Ad Science Holding Corp. (NASDAQ:IAS) given its 50% valuation discount to closest peer DoubleVerify Holdings, Inc. (NYSE:DV) and what he sees as a “rich set of ’23 product catalysts.”

According to Insider Monkey’s data, 15 hedge funds were long Integral Ad Science Holding Corp. (NASDAQ:IAS) at the end of Q3 2022, compared to 12 funds in the prior quarter. Robert Smith’s Vista Equity Partners is the leading position holder in the company, with 94.3 million shares worth $683.3 million. 

TimesSquare Capital made the following comment about Integral Ad Science Holding Corp. (NASDAQ:IAS) in its Q3 2022 investor letter:

“Offsetting that somewhat was the -27% showing from Integral Ad Science Holding Corp. (NASDAQ:IAS), which provides digital advertising verification services. Although revenues and earnings met expectations, management reduced its guidance for the rest of the year. Weakness from a potential recessionary environment may delay starting recent deals or otherwise elongate the sales cycle. We expect Integral to continue its strong growth path with healthy margins, so we added to our holdings.”

7. DoubleVerify Holdings, Inc. (NYSE:DV)

Number of Hedge Fund Holders: 15

DoubleVerify Holdings, Inc. (NYSE:DV) is a New York-based provider of software platforms for digital media measurement, data, and analytics in the United States and internationally. On November 8, DoubleVerify Holdings, Inc. (NYSE:DV) posted a Q3 GAAP EPS of $0.06 and a revenue of $112.3 million, outperforming Wall Street estimates $0.01 and $3.03 million, respectively. The company expects FY22 revenue of $450 million to $454 million, representing a year-over-year increase of 36% at the midpoint, while the consensus revenue came in at $449 million. 

On October 18, Barclays analyst Raimo Lenschow maintained an Equal Weight rating on DoubleVerify Holdings, Inc. (NYSE:DV) and trimmed the price target on the shares to $26 from $27. The presently uncertain outlook favors cash flow positive and established software vendors, the analyst told investors in a research note. 

According to Insider Monkey’s data, DoubleVerify Holdings, Inc. (NYSE:DV) was part of 15 hedge fund portfolios at the end of September 2022, compared to 12 funds in the prior quarter. Nancy Zevenbergen’s Zevenbergen Capital Investments is the biggest stakeholder of the company, with 2.16 million shares worth $59.2 million. 

Here is what Artisan Partners specifically said about DoubleVerify Holdings, Inc. (NYSE:DV) in its Q2 2022 investor letter:

“DoubleVerify Holdings, Inc. (NYSE:DV) is the leading provider of data analytics that enable advertisers to increase the effectiveness, quality and return on their digital advertising investments. Instead of advertisers having to rely on each platform’s (Facebook, Twitter, Google, etc.) own unique metrics and manually trying to aggregate them into a cohesive reporting framework, DoubleVerify’s software accomplishes this in one single solution. It uses its own measurement and analytics across the advertising ecosystem, providing brands with consistency and standardization in measuring the efficacy of their digital advertising spend. This helps solve a critical problem for brands and ultimately helps drive their future ad buying decisions, which can be particularly difficult when >40% of digital ads are never seen,<5% receive more than two seconds of engagement and 15%-20% of impressions are fraud where bots emulate human views. We believe the company is well positioned to benefit from increased penetration of digital ad impressions in new channels and geographies, market share gains and upselling existing customers to more advanced and higher priced offerings.”

6. Magnite, Inc. (NASDAQ:MGNI)

Number of Hedge Fund Holders: 19

Magnite, Inc. (NASDAQ:MGNI) is a New York-based company that operates an independent sell-side advertising platform in the United States and internationally. The company’s platform allows advertisers to manage and monetize their ads. On November 9, Magnite, Inc. (NASDAQ:MGNI) reported a Q3 non-GAAP EPS of $0.18 and a revenue of $127.7 million, outperforming Wall Street estimates by $0.03 and $3.57 million, respectively.  

On August 10, Susquehanna analyst Shyam Patil maintained a Positive rating on Magnite, Inc. (NASDAQ:MGNI) but lowered the price target on the shares to $13 from $24. The analyst said they posted a solid 2Q, with CTV topping expectations despite headwinds from the macro. 

According to Insider Monkey’s data, 19 hedge funds were long Magnite, Inc. (NASDAQ:MGNI) at the end of Q3 2022, compared to 23 funds in the prior quarter. Brian Bares, Russell Mollen, and James Bradshaw’s Nine Ten Partners is a prominent stakeholder of the company, with more than 2 million shares worth $13.7 million. 

Like The Interpublic Group of Companies, Inc. (NYSE:IPG), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc. (NASDAQ:GOOG), Magnite, Inc. (NASDAQ:MGNI) is one of the best adtech stocks according to smart investors. 

Here is what Alger has to say about Magnite, Inc. (NASDAQ:MGNI) in its Q2 2021 investor letter:

“Magnite provides an advertising supply side platform for publishers. The technology helps publishers such as network television stations or cable news providers automate the sale of digital advertising inventory across different formats and channels, like desktop, mobile, video, audio, connected TV and over-the-top TV. Publishers monetize their digital advertising inventory by using Magnite’s platform to access a global market of ad buyers, including advertising agencies that use supply side platforms. Magnite also helps sellers decrease costs and protect their brands and user experience. Magnite receives ad inventory from sellers and optimizes publishers’ revenue yields by processing the highest buyer bids. Currently, Magnite keeps approximately 10% of ad spend as revenue (i.e. take rate) and passes on the remainder of the ad spend to publishers. Magnite’s clients include many of the world’s leading publishers of websites and mobile applications and the company believes that its platform reaches approximately 1 billion individuals globally.

Shares of Magnite underperformed in the second quarter due to the growth market selloff and slower-than-expected growth in connected TV during the first three months of this year. We believe the 32% growth in connected TV was below expectations and due to a one-time issue with one of the company’s publishing partners that ran out of advertising inventory. Management noted the issue has been fixed and the company saw strong reaccelerating growth in April. Additionally, we believe Magnite’s recent acquisition of video advertising company SpotX will significantly bolster the company’s positioning within connected TV, a high-growth area of the digital advertising market that is taking share from linear TV ad budgets.”

5. Digital Turbine, Inc. (NASDAQ:APPS)

Number of Hedge Fund Holders: 24

Digital Turbine, Inc. (NASDAQ:APPS) is a Texas-based company that runs a mobile growth platform for advertisers, publishers, carriers, and device original equipment manufacturers. The company operates through three segments – On Device Media, In App Media AdColony, and In App Media Fyber.

On November 10, Craig-Hallum analyst Anthony Stoss maintained a Buy recommendation on Digital Turbine, Inc. (NASDAQ:APPS) but lowered the firm’s price target on the shares to $30 from $60 following better-than-feared Q3 results and guidance. The analyst believes resilient profitability margins make this a stock to own in a weak macro. He also sees home run potential with SingleTap.

According to Insider Monkey’s data, 24 hedge funds were bullish on Digital Turbine, Inc. (NASDAQ:APPS) at the end of September 2022, compared to 27 funds in the prior quarter. Scott Stewart Miller’s Greenhaven Road Investment Management is the largest stakeholder of the company, with 1.15 million shares worth $16.5 million. 

Greenhaven Road Capital made the following comment about Digital Turbine, Inc. (NASDAQ:APPS) in its Q3 2022 investor letter:

“Secondly, with the benefit of hindsight, Digital Turbine, Inc. (NASDAQ:APPS) should have been sized smaller. The combination of the cyclical nature of the advertising business, the execution risk in combining companies, and the fact that too large a portion of 2022 growth was to come from two customers (AT&T and Verizon) created many potential air pockets that have had a negative impact.”

4. The Interpublic Group of Companies, Inc. (NYSE:IPG)

Number of Hedge Fund Holders: 30

The Interpublic Group of Companies, Inc. (NYSE:IPG) is a New York-based provider of advertising and marketing services worldwide. It operates in two segments, Integrated Agency Networks (IAN) and IPG DXTRA. The Interpublic Group of Companies, Inc. (NYSE:IPG) is one of the best adtech stocks to buy according to hedge funds. The company paid a $0.29 per share quarterly dividend to shareholders on December 15. 

On October 14, JPMorgan analyst David Karnovsky said he sees attractive risk/reward profiles on the advertising agencies heading into the Q3 results and reiterated an Overweight rating on The Interpublic Group of Companies, Inc. (NYSE:IPG) with a price target of $38. 

According to Insider Monkey’s third quarter database, 30 hedge funds were bullish on The Interpublic Group of Companies, Inc. (NYSE:IPG), with combined stakes worth $595 million, compared to 30 funds in the prior quarter worth $566 million. Harris Associates is the leading stakeholder of the company, with 14.1 million shares worth $361.2 million. 

Here is what Ariel Fund & Ariel Appreciation Fund has to say about The Interpublic Group of Companies, Inc. (NYSE:IPG) in its Q3 2021 investor letter:

“Marketing communication company, Interpublic Group of Companies, Inc. (IPG) was the top contributor over the trailing one-year period. Notably, IPG is delivering a stronger than expected revenue mix between Technology and Healthcare relative to its peer group, solid cost containment and margin expansion. Meanwhile, the company continued to focus on de-levering the balance sheet. In our view, IPG’s Acxiom acquisition for data has proven to be a winner, helping the company increase their revenue across all eight major advertising sectors by industry. We believe these results continue to demonstrate the strength and resiliency of the business model and expect IPG to be a beneficiary of increasing advertising and marketing budgets across an improving global economy.”

3. The Trade Desk, Inc. (NASDAQ:TTD)

Number of Hedge Fund Holders: 37

The Trade Desk, Inc. (NASDAQ:TTD) is a California-based technology company that operates a self-service cloud platform that allows buyers to create, manage, and optimize data-driven digital advertising campaigns across different ad formats and channels, including display, video, audio, native, and social. The Trade Desk, Inc. (NASDAQ:TTD) is one of the top adtech stocks to invest in. On November 9, the company reported a Q3 non-GAAP EPS of $0.26 and a revenue of $394.77 million, outperforming Wall Street estimates by $0.03 and $8.24 million, respectively. 

On December 20, Piper Sandler analyst Matt Farrell initiated coverage of The Trade Desk, Inc. (NASDAQ:TTD) with an Overweight rating and a $60 price target. The Trade Desk, Inc. (NASDAQ:TTD) is a leading, independent demand side platform that allows media buyers to bid on programmatic ad impressions in digital settings, the analyst told investors in a research note. 

According to Insider Monkey’s data, 37 hedge funds were bullish on The Trade Desk, Inc. (NASDAQ:TTD) at the end of Q3 2022, compared to 34 funds in the prior quarter. D E Shaw is the largest stakeholder of the company, with 3.90 million shares worth $233 million. 

Here is what Baron Funds specifically said about The Trade Desk, Inc. (NASDAQ:TTD) in its Q3 2022 investor letter:

“The Trade Desk, Inc. (NASDAQ:TTD) is the leading internet advertising demand-side platform, enabling agencies and companies to buy and track digital advertising. The company reported 35% growth in sales, a terrific result in a softening advertising market, and the shares rose. EBITDA margins were 37% in the quarter, and cash flow also beat expectations. The company is benefiting from the growth in advertising on Connected TV and advertisers’ desire to work with Trade Desk, as a neutral service provider, as opposed to Google who does not share critical data with its partners/advertisers. Also, Netflix announced that it would be offering a tier of service that includes advertising, which is a seminal moment in the development of digital advertising and a big growth opportunity for Trade Desk. Though it is an expensive stock on near-term estimates, we believe Trade Desk can continue to compound its EBITDA and EPS at a 25% to 30% clip into the future, creating significant value in time.”

2. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 115

Netflix, Inc. (NASDAQ:NFLX) provides entertainment services and the company decided in 2022 to offer an ad-supported tier and allow advertisers the chance to run commercials alongside shows. It is one of the premier adtech stocks to buy according to hedge funds. The new ad-supported plan, which costs $6.99 per month, accounted for 9% of new Netflix sign-ups in the U.S. during November 2022. 

On December 19, Morgan Stanley analyst Benjamin Swinburne raised the price target on Netflix, Inc. (NASDAQ:NFLX) to $275 from $250 and kept an Equal Weight rating on the shares. The analyst said the launch and potential of the ad-tier and paid sharing have allowed Netflix, Inc. (NASDAQ:NFLX) shares to “nicely outperform since July” as consensus net adds expectations have lifted.

According to Insider Monkey’s data, Netflix, Inc. (NASDAQ:NFLX) was part of 115 hedge fund portfolios at the end of Q3 2022, up from 95 in the earlier quarter. Ken Fisher’s Fisher Asset Management is a prominent stakeholder of the company, with 6.7 million shares worth $1.6 billion. 

Harding Loevner made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2022 investor letter:

“Netflix, Inc. (NASDAQ:NFLX) mustered a modest recovery as the market Allocation Effect: 0.3 mulled the potential of its new lower-priced ad-supported subscription model to drive revenue growth and reduce its dependency on continued heavy investment in content to attract and retain viewers.”

1. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 156

Alphabet Inc. (NASDAQ:GOOG) is an American Big Tech firm that operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment offers products and services, including ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is one of the most popular adtech stocks to invest in. 

On December 22, Piper Sandler analyst Thomas Champion said he views the news of the National Football League announcing a multi-year agreement with Alphabet Inc. (NASDAQ:GOOG)’s YouTube for rights to the NFL Sunday Ticket as a positive and it will likely accelerate the push toward over-the-top time spent and ad dollars moving to streaming. He reiterated an Overweight rating and a $122 price target on Alphabet Inc. (NASDAQ:GOOG) shares.

According to Insider Monkey’s third quarter database, 156 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG), compared to 153 funds in the last quarter. Chris Hohn’s TCI Fund Management is the largest stakeholder of the company, with 52.4 million shares worth $5 million. 

Here is what Stewart Asset Management has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter:

“We invest in businesses with strong, resilient earnings growth which are less cyclical. In the pandemic recession of 2020, the aggregate earnings of the portfolios we manage did not decline year-over-year, and in fact grew, albeit modestly. Looking at the Great Recession which began at year-end 2007 and lasted to mid-year 2009 is helpful too. Our four largest current holdings in the portfolio weathered that period well. Alphabet (NASDAQ:GOOG), then called Google, reported earnings that doubled from 2007 to 2010.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 12 Most Advanced Countries in Electronics and 12 Biggest Metaverse Companies in the World. 

Suggested articles:

• 12 Best Seasonal Stocks To Buy
• 17 Biggest Energy Companies in the US
• 16 Biggest Utility Companies in the US

Disclosure: None. 10 Best Adtech Stocks To Buy According To Hedge Funds is originally on Insider Monkey.