1) The Trade Desk, Inc. (NASDAQ:TTD)
Average Upside Potential: 43.46%
Number of Hedge Fund Holders: 42
The Trade Desk, Inc. (NASDAQ:TTD) operates as a technology company, empowering the buyers of advertising. With the help of its self-service, cloud-based platform, ad buyers can create, manage, and optimize digital advertising campaigns. With the help of its platform, the company allows advertisers to target certain audiences with ads on streaming platforms, CTV, and digital video services. Streaming television (also termed CTV) can be a long-term growth driver for the company. KeyBanc analyst Justin Patterson upped the company’s price target to $142 from $140, keeping an “Overweight” rating on The Trade Desk, Inc. (NASDAQ:TTD)’s stock.
Talking about the big picture, KeyBanc expects that ramps in CTV, retail media, audio, and OpenPath can result in creating a multi-year growth vector. Elsewhere, analyst Brian Pitz from BMO Capital gave a “Buy” rating on The Trade Desk, Inc. (NASDAQ:TTD)’s stock. The analyst opines that the company is well-placed in the ever-evolving and growing CTV market, which is regarded as a significant growth driver. The Trade Desk, Inc. (NASDAQ:TTD) is anticipated to continue to gain inventory access in this space, cementing its long-term growth potential.
In December, the company undertook a reorganization to accelerate opportunities throughout CTV, retail media, identity, supply chain optimization, and audio. With leading advertisers pivoting to premium scalable channels in contrast to the limitations of user-generated content, there is a significant long-term growth opportunity. In 2025 and beyond, The Trade Desk, Inc. (NASDAQ:TTD) remains well-placed to help clients take full advantage of data-driven advertising on the premium internet. Rowan Street Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“The Trade Desk (TTD): Investment Initiated: March 2020
Internal Rate of Return (IRR): 54%
The Trade Desk has been our most successful investment to date. March 2025 will mark five years since we opportunistically initiated our position at a cost basis of $17.40 (split-adjusted). Since then, TTD has appreciated more than sevenfold, delivering an annualized return of approximately 54%.
These exceptional results far outpace the company’s strong fundamental growth, with revenues and earnings compounding at approximately 25% annually over this period (refer to the table below). The primary reason for this outsized return lies in the price at which we were able to acquire TTD during the early days of the pandemic, when market fears briefly drove it down to just 10x revenues. Today, the valuation has expanded significantly to approximately 25x revenues, amplifying our returns…” (Click here to read the full text)
While we acknowledge the potential of TTD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than TTD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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