We recently compiled a list of the 15 Best Advertising Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Magnite, Inc. (NASDAQ:MGNI) stands against the other advertising stocks.

Ad spending in 2024 received a significant boost from recurring events such as the US election and the Olympics, and experts believe that these spending patterns are likely to add billions to the market.  Media agency Magna increased its US ad spending forecast for the year, expecting revenue growth of 11.4% to $377 billion, per the news shared with Marketing Dive. The company expects non-cyclical ad spending to grow by 8.9%, reflecting a rise from 8.2% in previous forecasts. This marks one of the best performances for the category in 20 years. This revision stemmed from improved macroeconomic conditions, healthy appetites in digital and streaming, and cyclical events, such as the elections and the Summer Olympics.

Advertising To Top US$1 trillion in 2026, Says PwC

As per PwC, fueling revenue growth by selling E&M products directly to users is challenging. Of the 3 major categories i.e., consumer spending, connectivity, and advertising, consumer spending is the smallest and slowest growing. The connectivity category i.e., fixed and mobile services, topped US$1.1 trillion in 2023. Advertising outpaced consumer spending in 2023 and should top US$1 trillion in 2026. PwC believes that it is expected to grow at a 6.7% CAGR through 2028.

With advertising expected to make up ~55% of total E&M industry growth over the upcoming 5 years, PwC believes that it will become a more important part of companies’ business models. For strategic reasons, all participants in the E&M industry are required to be more skillful at selling ads.

According to PwC, the changes to the way businesses approach the ad business are expected to be seen in 3 key areas. Firstly, the monetization of data is expected to fuel more sophisticated advertising models. Next, the connection will be closer between the discovery of products and services and their purchase and consumption. Finally, it will be important for companies to understand how global privacy regulations impact growth.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Trends To Watch Out for in 2025

As per Mediatool, key advertising trends to look out for include an emphasis on authenticity, visual content domination, integration of AI, mobile-centric campaigns, and growth of social commerce. AI/ML has become important in the world of digital advertising. As of now, 32% of marketers leverage AI for creating, managing, and optimizing their ads. According to Market.us, the global AI in advertising market is expected to reach $28.4 billion in the year 2033 with a CAGR of 28.4%. This was valued at $6.7 billion in the year 2023. Based on the application, targeted advertising dominated the broader market with a share of 31.1% in 2023.

Our Methodology

To list the 15 Best Advertising Stocks to Buy According to Hedge Funds, we used a screener and sifted through several online rankings. After getting the initial list of 25-28 stocks, we selected the ones having high hedge fund holdings. Finally, the stocks were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Magnite, Inc. (NASDAQ:MGNI)

Number of Hedge Fund Holders: 20

Magnite, Inc. (NASDAQ:MGNI) operates an independent omni-channel sell-side advertising platform in the US and internationally.

Magnite, Inc. (NASDAQ:MGNI)’s focus on emerging advertising formats should fuel revenue growth by expanding its market presence and meeting the diverse needs of advertisers and publishers. The company continues to invest in formats such as digital out-of-home (DOOH), audio, podcasts, and native ads. These emerging formats support advertisers looking to engage consumers in non-traditional and innovative ways. This broadens Magnite, Inc. (NASDAQ:MGNI)’s revenue streams.

The emerging formats enable the company to adapt to industry changes, like reduced third-party data availability because of privacy regulations. Formats such as podcasts and DOOH are dependent on contextual targeting and first-party data, aligning with Magnite, Inc. (NASDAQ:MGNI)’s expertise in audience curation. The DOOH advertising market continues to expand at a rapid pace as digital screens proliferate in public spaces including malls, transit hubs, and outdoor billboards.

The global DOOH advertising market was valued at US$24.32 billion in 2023 and should reach US$74.23 billion by 2032 (as per Straits Research). By entering this market, Magnite, Inc. (NASDAQ:MGNI) can tap into new revenue streams and cater to advertisers seeking large-scale visibility.

Choice Equities Capital Management recently released its third-quarter 2024 investor letter. Here is what the fund said:

“Magnite, Inc. (NASDAQ:MGNI) and CROX – Magnite, Inc. and Croc’s Inc. remain holdings in the portfolio and were recently discussed in detail on the Yet Another Value Blog podcast, which can be found here: YAVB podcast. As discussed herein, both remain well-positioned in their respective industries and represent attractive values on anticipated cash flows in years to come. Magnite, as highlighted, looks attractive on its own merits, though shares could become particularly interesting should a handful of industry anti-trust events break their way.”

Overall MGNI ranks 4th on our list of the best advertising stocks to buy according to hedge funds. While we acknowledge the potential of MGNI 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 MGNI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.