Key Takeaways TTD's shares fell 68% in a year, lagging strong gains in the Internet Services industry and broader market.TTD boosts AI platforms like Kokai and expands tools such as OpenPath to widen its moat.TTD holds $1.4B cash, no debt, approved $500M buybacks and sees Q4 2025 revenues of at least $840M.The Trade Desk ((TTD) stock has been a laggard performer in the digital ad space. It has seen a sharp 68.1% decline over the past year, an uncomfortable drawdown for a company viewed as one of ad tech’s l ...

Key Takeaways TTD's CTV is its fastest-growing channel, with video including CTV making up about half of Q3 revenues.TTD boosts AI platforms like Kokai and expands tools such as OpenPath to widen its moat.Competition is intensifying as MGNI and PubMatic boost their CTV efforts.The Trade Desk’s ((TTD) Connected TV (“CTV”) business is its “largest and fastest-growing channel” and continues to pace faster than the overall business. Video, including CTV, accounted for roughly half of revenues in the third quart ...

Group 1: Nvidia - Nvidia is the world's largest company by market cap and is experiencing rapid growth, particularly in the AI sector, with expectations of significant capital expenditures in data centers reaching $3 trillion to $4 trillion by 2030, up from $600 billion in 2025 [3][5] - The stock trades at 24 times 2026's earnings, which is considered reasonable given its expected multi-year growth [5][6] - Nvidia's GPUs are in high demand, leading to a sold-out status for cloud GPUs, allowing the company to take orders years in advance [5] Group 2: The Trade Desk - The Trade Desk has faced a challenging year, being the worst-performing company in the S&P 500 for 2025, down approximately 70% [6][8] - Despite a revenue increase of 18% year-over-year in Q3, the company is experiencing slowing growth due to rising competition and issues with its new AI-powered platform, Kokai [8][10] - The stock is currently undervalued, trading at less than 18 times 2026's earnings, presenting a potential for a solid comeback in 2026 [10] Group 3: MercadoLibre - MercadoLibre has shown a 17% increase for the year, which is considered disappointing compared to its historical performance [11][12] - The company is a leading e-commerce and fintech platform in Latin America, combining features of Amazon and PayPal, and is positioned for significant growth in the region [12][15] - The stock is trading at just 15 times free cash flow, making it an attractive buy, especially as it is down over 20% from its all-time high [15]

Industry Overview - The global digital advertising market is projected to grow at a CAGR of 15.4% from 2025 to 2030, indicating its attractiveness as a long-term growth market in technology [1]. Company Analysis: The Trade Desk (TTD) - TTD is a leading independent demand-side platform (DSP) in digital advertising, focusing solely on advertising, which allows for concentrated efforts on product innovation and customer relationships [4]. - TTD has a strong customer retention rate, consistently above 95% as of Q3 2025 [4]. - Connected TV (CTV) is a significant growth driver for TTD, with management expecting decision-based CTV buying to become the standard model [5]. - Strategic partnerships with major companies like Disney, NBCU, and Roku enhance TTD's market position, with video advertising comprising over 50% of its total business [6]. - TTD's financial health is robust, with $1.4 billion in cash and no debt, allowing for continued innovation and market expansion [7]. - The company is investing in AI-driven platforms like Kokai, which has shown significant performance improvements compared to previous models [8]. - Despite its strengths, TTD faces intense competition from major players like Meta, Apple, Google, and Amazon, which control significant inventory and user data [9]. Company Analysis: Amazon (AMZN) - Amazon's advertising business generated $17.6 billion in Q3 2025, reflecting a 22% year-over-year increase, supported by its full-funnel advertising offerings [12]. - Amazon DSP leverages extensive first-party data, enabling advertisers to optimize their campaigns effectively [13]. - Partnerships with platforms like Roku and Netflix, along with integrations with Spotify and SiriusXM, enhance Amazon's advertising reach [14]. - Live sports on Prime Video are a key growth area for Amazon's ad business, with strong advertiser interest noted for upcoming years [15]. - AI is increasingly integral to Amazon's advertising strategy, with new tools designed to streamline the creative process [16]. - Amazon's advertising segment is still a small portion of its overall revenue, indicating significant growth potential, while its diversified business model provides stability [17]. Valuation and Performance Comparison - TTD shares have declined by 4.6% over the past month, while AMZN shares have increased by 0.5% [20]. - Both companies are considered overvalued, with TTD trading at a forward P/E ratio of 17.84X and AMZN at 29.02X [21][23]. - Analysts have made slight upward revisions to TTD's earnings estimates, while AMZN's estimates have been revised upward by 4.5% for the current fiscal year [24][25]. - TTD holds a Zacks Rank of 3 (Hold), whereas AMZN has a Zacks Rank of 2 (Buy), suggesting a stronger investment case for Amazon [27][28].

Core Viewpoint - The stock market is expected to perform well in 2026, prompting investors to prepare a list of potential stock picks for their portfolios [1] Group 1: Top Stock Picks - Nvidia is projected to remain a leading stock due to its pivotal role in the AI sector, with significant capital expenditures expected in data centers [3][5] - AMD is anticipated to close the gap with Nvidia in the GPU market, with a projected 60% compound annual growth rate in data center revenue over the next five years [6][7] - Broadcom is focusing on custom AI accelerators for hyperscalers, with a 74% year-over-year increase in AI semiconductor revenue expected to accelerate above 100% in Q1 fiscal 2026 [8][10] - Taiwan Semiconductor is the largest chip foundry and is expected to benefit from ongoing high AI infrastructure spending [11][12] - Alphabet is emerging as a strong player in AI with its generative AI model, Gemini, and has a robust business in Google Search and Google Cloud [13][15] - Meta Platforms is expected to see growth driven by AI, despite recent stock price declines, presenting a buying opportunity [16][17] - Amazon's revenue growth in advertising and cloud computing is expected to continue, supporting stock recovery [18] - PayPal's stock is considered undervalued with strong earnings growth potential, particularly through share buybacks [19][21] - The Trade Desk is projected to grow revenue at a 16% pace in 2026, despite recent challenges [22][23] - MercadoLibre remains a dominant e-commerce player in Latin America, with past stock pullbacks providing good buying opportunities [24][25]

Core Viewpoint - The Trade Desk is a high-quality company in ad tech, but its investment potential is debated as competitive pressures increase going into 2026 [1] Reasons to Buy - The business remains fundamentally strong with revenue growth in the high teens and customer retention exceeding 95% in 2025, indicating continued advertiser reliance on the platform [3][4] - The growth of connected TV (CTV) and retail media provides long-term tailwinds as advertisers shift budgets to data-driven channels, positioning The Trade Desk to benefit from this structural market growth [4] - The AI-powered platform Kokai is gaining traction, leading to lower acquisition costs and improved engagement, which could provide a competitive advantage if it continues to deliver ROI [5][6] Reasons to Stay Cautious - Competition has intensified with Amazon's advertising business gaining traction, particularly through its partnership with Netflix, which poses risks to The Trade Desk's premium supply access [10][11] - The company's history of flawless execution has been disrupted, with a streak of beating revenue expectations ending in late 2024, leading to increased volatility and investor skepticism [12][13] - The stock carries a premium valuation with a P/E ratio of 46, requiring strong growth and stable margins to justify the price, which is uncertain given the current competitive landscape [16][18]

Core Viewpoint - The Trade Desk has experienced a significant stock decline of approximately 67% year-to-date, raising questions about its growth potential and market position [1][10]. Financial Performance - The Trade Desk reported revenue of US$739 million for the third quarter, marking an 18% year-over-year increase [2]. - Excluding political ad spending from the previous year, underlying growth accelerated to 22%, up from 19% in the prior quarter, indicating a solid financial foundation [3]. Competitive Landscape - Investor concerns are heightened due to competition from Amazon, whose advertising division grew over 23% year-on-year and generated nearly 24 times the revenue of The Trade Desk [5]. - CEO Jeff Green emphasized that Amazon's revenue primarily comes from sponsored listings, which differ from The Trade Desk's focus on open internet programmatic advertising [5][6]. Internal Developments - The Trade Desk has undergone significant internal restructuring, including the hiring of a new COO, CFO, and Chief Revenue Officer, the latter coming from Google, signaling a long-term strategic vision [7][8]. - The company's AI-driven platform, Kokai, has shown strong results, leading to improved client performance metrics such as a 26% better cost per acquisition and a 94% improvement in click-through rates [8][14]. Business Strategy - Joint Business Plans (JBPs) now account for approximately half of The Trade Desk's revenue and are growing faster than the overall business, with over 180 active JBPs [9]. - The current stock price around US$39 reflects a shift from hypergrowth expectations to a focus on profitability and strong cash flow, positioning the company for future growth despite competitive pressures [10][11].

Core Insights - The Trade Desk (TTD) is poised for expansion with a strong financial profile that supports long-term investment [1] Financial Performance - TTD ended Q3 with cash, cash equivalents, and short-term investments totaling $1.4 billion and no debt [2] - The company reported revenues of $739 million, reflecting an 18% year-over-year growth [2] - Adjusted EBITDA was $317 million, with a free cash flow of $155 million, indicating strong operational efficiency with a 43% adjusted EBITDA margin [2] Strategic Initiatives - TTD is focusing on enhancing AI-driven platforms like Kokai and data transparency tools such as OpenPath and Sincera, with 85% of clients using Kokai as their default experience [4] - Kokai has shown significant performance improvements, delivering 26% lower cost per acquisition, 58% lower cost per unique reach, and a 94% higher click-through rate compared to Solimar [4] Market Opportunities - Approximately 60% of TTD's total addressable market is outside the United States, with international business currently accounting for about 13% of total revenues, presenting a long-term growth opportunity [5] - As digital advertising increasingly shifts towards AI-driven campaigns, TTD's strong cash position provides a buffer against macroeconomic volatility [6] Shareholder Value - TTD has committed to enhancing shareholder value through stock repurchases, having bought back $310 million worth of stock in Q3 and approving a new $500 million buyback plan [7] - This strategy not only mitigates dilution but also reflects confidence in the company's long-term cash generation capabilities [7] Competitive Landscape - TTD faces competition from Amazon, which is increasing investments in its DSP and CTV businesses, with Amazon's ad business generating $17.6 billion in revenues, up 22% year-over-year [12] - TTD's liquidity and free cash flow generation may serve as durable advantages in a market characterized by capital discipline and platform efficiency [6]

Core Viewpoint - The Trade Desk (TTD) stock has experienced a significant decline of 44% over the past six months, contrasting sharply with the growth of the Zacks Internet Services industry at 74.8% during the same period [1][8]. Price Performance - TTD's performance lags behind other ad tech companies such as Amazon (AMZN), which has gained 5.7%, while Magnite (MGNI) and Criteo (CRTO) have declined by 16.5% and 18.6%, respectively [3][8]. Company-Specific Challenges - The decline in TTD's stock price is attributed more to company-specific challenges rather than broader market trends, raising questions for investors about whether this is a buying opportunity or a sign of deeper issues [4][8]. Long-Term Growth Drivers - Several tailwinds support TTD's long-term growth narrative, including Connected TV (CTV), retail media, Kokai, international growth, and supply-chain modernization efforts like OpenPath [5][8]. - The transition from linear TV to digital spending in CTV is a key growth driver, with management expecting decision-based CTV to become the default buying model [6][8]. - The rise of retail media networks is also beneficial, as retailers are increasingly partnering with TTD for precise targeting and attribution [7][8]. Competitive Advantages - Kokai, TTD's AI-powered demand-side platform (DSP), is central to its strategy, with 85% of clients using it as their default experience, leading to improved performance metrics [9][8]. - TTD's initiatives like OpenPath and others enhance its ecosystem by connecting advertisers directly to publishers, improving transparency and efficiency [10][8]. International Market Potential - Approximately 60% of TTD's total addressable market lies outside the United States, with international business currently representing about 13% of total revenues, indicating significant growth potential [11][8]. Financial Position - TTD has a strong balance sheet with a cash position of $1.4 billion and no debt, providing a buffer against macro volatility [12][8]. - The company repurchased $310 million worth of stock in the third quarter and has approved a new buyback plan of $500 million, anticipating revenues of at least $840 million for Q4 2025 [13][8]. Cost and Competitive Pressures - Rising expenses and competition pose near-term challenges, with total operating costs increasing by 17% year over year to $457 million [15][8]. - The competitive landscape is intensifying, particularly from major players like Meta, Apple, Google, and Amazon, which control their inventory and user data [17][8]. Valuation Concerns - TTD's stock is considered to have a stretched valuation, trading at a price/book multiple of 7.46X compared to the industry's 7.89X [19][21]. Conclusion - While TTD has several long-term catalysts, the near-term outlook is complicated by macro uncertainty, rising expenses, and competitive pressures, suggesting that current investors may hold their positions while new investors should wait for a more favorable entry point [22][23].

Core Insights - Brown Advisory's Large-Cap Growth Strategy reported a net return of -0.88% in Q3 2025, underperforming the Russell 1000 Growth Index due to underweighting speculative momentum-driven stocks despite significant exposure to AI [1] - The Trade Desk, Inc. (NASDAQ:TTD) experienced a one-month return of -16.25% and a 52-week decline of 71.36%, closing at $39.95 with a market capitalization of $19.533 billion on December 2, 2025 [2] - The Trade Desk's quarterly results slightly exceeded consensus, but its Q3 guidance disappointed investors compared to strong performances from peers like Meta, Google, and Amazon [3] Company Performance - The Trade Desk transitioned 75% of its customers to its new AI-powered platform, Kokai, with full adoption expected by year-end, leading to improved ROI for customers [3] - The Trade Desk reported revenue of $739 million in Q3 2025, reflecting an 18% year-over-year growth [4] - The number of hedge funds holding The Trade Desk decreased from 60 to 42 in Q3 2025, indicating a decline in popularity among institutional investors [4] Market Position - The Trade Desk is recognized as one of the largest independent demand-side advertising platforms globally, positioning itself for long-term growth in digital advertising [3] - Despite its potential, certain AI stocks are viewed as having greater upside potential and less downside risk compared to The Trade Desk [4]