Artificial intelligence (AI) has given Nvidia (NVDA -1.69%) a massive boost in the past six months as it has become evident that the chipmaker is going to play a mission-critical role in the proliferation of this technology.

Nvidia stock has soared roughly 190% this year, and that rally seems justified, as the boom in AI adoption has created a massive demand for the company's graphics cards. The AI-driven demand has turned Nvidia's fortunes around remarkably, with the company expected to clock nearly 60% revenue growth in the current fiscal year (2024) to $43 billion. Its earnings are expected to more than double to $7.78 per share from $3.34 per share in the prior fiscal year.

That's a big jump from fiscal 2023 (which ended on Jan. 29, 2023), when Nvidia's top line remained flat at $27 billion. Meanwhile, the oversupply of personal computer (PC) graphics cards -- owing to a big crash in PC sales -- led to a 25% decline in the semiconductor giant's adjusted earnings in fiscal 2023. This makes it clear that AI is moving the needle in a big way for Nvidia, and it could continue to be a key growth driver for the company in the long run.

However, Nvidia's terrific rally means that the stock is now trading at an expensive 39 times sales. So investors who are looking to cash in on the AI boom with Nvidia's help will have to pay a big premium to buy the stock now. But there is another stock that could win big from the proliferation of AI, and the good part is that it is trading at a cheaper valuation than Nvidia.

Expect The Trade Desk to see a big boost from AI adoption

AI is expected to change multiple industries, and one of them is digital marketing and advertising. Grand View Research forecasts that AI in marketing could generate a whopping $82 billion in annual revenue by the end of the decade, growing at an annual pace of 26% through 2030. The Trade Desk (TTD 3.21%) gives investors a way to tap this lucrative opportunity.

The Trade Desk is a provider of real-time programmatic marketing and advertising services. The company plies its trade in the fast-growing advertising technology (adtech) space, which is witnessing strong adoption thanks to its ability to drive greater returns on investments for advertisers. That's because adtech providers such as The Trade Desk provide a data-driven platform that is used by clients -- advertisers, agencies, and brands, among others -- to target audiences based on their requirements and budgets.

The Trade Desk enables advertisers to automate their campaigns and optimize them in real time to generate stronger returns on their ad spending. Programmatic advertising also allows clients to choose from multiple ad channels including smartphones, tablets, computers, online videos, and connected TVs.

AI makes the process of targeting specific audiences and optimizing and automating ad campaigns better since the technology can be used to gain solid insights into how customers behave. As a result, advertisers can make better recommendations to their target audiences. This explains why The Trade Desk has been using AI to improve its adtech platform.

The company launched an AI system called Koa five years ago with the aim of analyzing the performance of ads so its platform could help advertisers improve its reach and efficiency. According to The Trade Desk:

By analyzing data from across the internet, Koa surfaces insights and recommendations to make sure you're setting your campaigns up for success. Once campaigns are live, Koa automatically optimizes performance and spend to ensure that you're reaching your audience on the right media, in the most efficient and effective way.

And now, the company is pushing the envelope further with a new AI-enabled platform known as Kokai, which was unveiled earlier this month. The Trade Desk points out that Kokai uses "13 million advertising impressions every second, each of which may contain thousands of distinct signals" so that advertisers can "buy the right ad impressions, at the right price, to reach the target audience at the best time."

The Trade Desk believes that Kokai could act as an able assistant to digital marketers to help them make the best possible decisions. It is also worth noting that the new platform is an upgrade over Koa, which used to analyze 9 million impressions each second.

The Trade Desk is set to grow fast

The Trade Desk has been gaining market share in the digital marketing space, which explains why the company has been able to increase its revenue at impressive rates at a time when larger competitors have witnessed a big slowdown. And now, the addition of a more powerful AI platform should give its growth a nice shot in the arm.

TTD Revenue Estimates for Current Fiscal Year Chart

TTD Revenue Estimates for Current Fiscal Year data by YCharts

It won't be surprising to see The Trade Desk growing faster than what analysts expect, thanks to the integration of AI. That's why investors should consider buying this stock before it heads higher.

Shares of The Trade Desk are up roughly 75% in 2023 so far, and that has made the stock expensive compared to where it was at the end of last year. The Trade Desk ended 2022 with a price-to-sales (P/S) ratio of 15. Its P/S ratio has now jumped to 23. Still, shares of the company are way cheaper than shares of Nvidia, which commands a way more expensive sales multiple, as we saw earlier.

It is also worth noting that analysts expect The Trade Desk's earnings to increase at an annual rate of 24% for the next five years, which is greater than the 21% earnings growth they expect Nvidia to deliver over the same period. All this indicates that The Trade Desk looks like a nice Nvidia alternative for investors looking to buy an AI stock that is trading at a cheaper valuation, and they may not want to miss this opportunity considering the multibillion-dollar opportunity in the AI-enabled ad market.