The Trade Desk (TTD 2.02%) has turned out to be a solid investment in 2023 as shares of the advertisement technology (adtech) provider have shot up 96% as of this writing, driven by the company's impressive growth even at a time when the broader digital advertising market was in a slump.

However, investors may now be wondering if The Trade Desk could sustain its rally, especially considering the hefty valuation it commands following this year's gains. That's why it would be a good time to take a look at the bearish argument against The Trade Desk and check if it could pose a credible threat to the stock's impressive run.

The obvious bearish argument against investing in The Trade Desk

The Trade Desk is now trading at a really rich 27 times sales. It is worth noting that the stock was trading at just under 15 times sales at the end of 2022. Bears might argue that The Trade Desk doesn't deserve such an expensive valuation since its growth is expected to slow this year.

The company ended 2022 with $1.6 billion in revenue, which was a 32% jump over the prior year. It is worth noting that the Trade Desk's revenue growth last year was down from the 43% increase it registered in 2021. In 2023, The Trade Desk's growth trajectory is anticipated to slow further. Its revenue in the first quarter of the year increased 21% to $383 million, down remarkably from the 43% year-over-year growth it clocked in the same period a year ago.

The Trade Desk expects $452 million in revenue for the second quarter, which would be a 20% increase over the prior-year period. Again, that would translate into a sharp slowdown from the 35% year-over-year revenue growth that The Trade Desk reported in the second quarter of 2022. Though the company hasn't issued a full-year forecast, trends of the first two quarters mean that it is unlikely to deliver 30%-plus revenue growth in 2023.

Analysts are forecasting a 22% jump in the company's revenue this year to $1.92 billion, a 10-percentage-point decline over its 2022 growth. The Trade Desk's detractors could point out that the company's growth should have ideally accelerated this year thanks to an improvement in digital ad spending.

According to eMarketer, digital ad spending increased by 8.6% in 2022, down from the 29.5% growth it enjoyed in 2021. This year, digital ad spending is expected to increase by 10.5%. So, The Trade Desk should have ideally enjoyed favorable year-over-year comparisons and delivered stronger growth in 2023, especially considering its claims of gaining market share in the digital ad space.

However, uncertain macroeconomic conditions led management to issue cautious guidance. So, The Trade Desk's rally may seem in jeopardy given its slowing growth, high valuation, and the economic headwinds that could impact its business in the near term. This explains why bears may gain the upper hand, and the stock's hot rally could halt.

But if that happens and The Trade Desk stock falls, bulls may want to capitalize on the drop and consider buying the stock at a relatively cheap valuation. Let's see why.

The long-term scenario seems bullish

While The Trade Desk stock may take a hit in the near term, investors would do well to focus on the long-term opportunity that the company could have. According to a third-party estimate, the global programmatic ad market could grow by $314 billion between 2022 and 2026, which explains why analysts are expecting an acceleration in the company's growth.

TTD Revenue Estimates for Current Fiscal Year Chart.

TTD Revenue Estimates for Current Fiscal Year data by YCharts.

In fact, The Trade Desk believes that it is sitting on a massive total addressable market (TAM) worth $830 billion, which is the size of the global ad market. That's because the company points out that all types of advertising, including offline, could eventually be transacted online. Additionally, The Trade Desk is looking to push the envelope within the digital ad spending space by adopting artificial intelligence (AI) tools.

The company recently unveiled a new AI platform known as Kokai, which aims to help advertisers to invest in the correct ad channels at the right prices to help them reach their target audience at the best possible time. Given that the adoption of AI in the digital marketing space is expected to grow at an annual pace of 29% through the end of the decade and generate almost $49 billion in annual revenue, it won't be surprising to see more advertisers flock toward The Trade Desk's AI-powered programmatic advertising platform.

In all, The Trade Desk could turn out to be a top growth stock, given the massive market opportunity it is sitting on, its share gains over other advertisers, and the addition of technological tools such as AI to its offerings. That's why any pullback in the Trade Desk's shares could give investors an opportunity to buy this tech stock considering the bullish long-term scenario.