Artificial intelligence (AI) got the bulk of interest from tech investors in the past couple of years, but it's not the only tech sector with upside potential.
One industry that is delivering solid growth and still has a long runway ahead of it is ad tech. Digital media has transformed advertising. Alphabet and Meta Platforms are the biggest winners in the industry, but there are others benefiting as well, including ad tech companies taking advantage of continued growth in areas such as connected TV, retail media, better ad targeting, and improvements enabled by AI.
Keep reading for more details on two of these ad tech stocks that can make investors a fortune.
Image source: Getty Images.
1. Roku
There's no getting around it: Roku's (ROKU +2.26%) performance disappointed investors in recent years. Roku's stock price remains down more than 80% from its peak in 2021. That's when the pandemic-driven boom quickly faded as the economy reopened and the streaming industry's surging growth hit a wall.
Roku was forced to do several rounds of layoffs, having overspent during the pandemic. But the business and the streaming industry more broadly underwent a reset and are prepared for growth. Netflix's stock soared to an all-time high recently as its ad tier has taken off. Walt Disney is now making a profit in its streaming division, and the stock recently hit a 52-week high, while Warner Bros. Discovery is splitting into two companies, one focused on studios and the other on streaming.
NASDAQ: ROKU
Key Data Points
Streaming services appear to be moving past their post-pandemic struggles, and Roku should benefit. Despite the stock's woes, the business continues to deliver solid growth, with revenue up 16% year over year in the first quarter to $1.02 billion, and its bottom line is improving as well. The company also expects to report an operating profit using generally accepted accounting principles (GAAP) metrics.
There are also other signs of building momentum. The stock price jumped on Monday after the company announced an exclusive integration with Amazon's demand side platform, and it's also gaining share of listings on retail sites such as Amazon and Target, a sign that it's probably gaining market share as well.
As the leading streaming distribution platform, Roku is well-positioned to capitalize on continued growth in connected TV, and at a market cap of $11 billion, the stock could easily double, triple, or better from here, especially if it hits its profit goal.
2. The Trade Desk
As the leading independent demand-side ad tech platform, The Trade Desk (TTD 2.15%) has been a longtime winner on the stock market.
The Trade Desk consistently innovates with new technology, including its AI platform Kokai, its Unified ID 2.0 cookieless tracking protocol, and its OpenPath supply path optimization program.
Now looks like an especially good time to buy shares of the Trade Desk because they're on sale, trading down 50% from their peak late last year. That's partly due to a disappointing earnings report in February, when the ad tech company missed its own guidance for the first time since its IPO. At the time, CEO Jeff Green said a few internal errors contributed to the miss, rather than a competitive threat or macroeconomic weakness.
NASDAQ: TTD
Key Data Points
In the first quarter, the company redeemed itself, reporting 25% year-over-year revenue growth to $616 million.
The Trade Desk was one of the few digital advertising companies to continue to deliver strong growth, showing its ability to grow in any type of market environment.
Looking ahead, The Trade Desk continues to gain support for its cookieless tracking solution, growing its larger customer ecosystem and making the platform even stronger.
The Trade Desk looks well-positioned to continue delivering steady growth, and investors can capitalize on a rare discount in the stock right now.
