The Trade Desk (TTD 1.33%) has long been the independent alternative to the tech giants in the advertising industry. With connected TV (CTV) on the rise, retail media expanding quickly, and advertisers increasingly seeking transparency, the company has carved out a niche as a demand-side platform (DSP). Its high customer retention and steady profitability reflect a business with staying power.
However, as much as I respect the business, I don't think the stock is a buy at this time. Between competitive pressures, execution challenges, and valuation, the risk-reward balance isn't compelling.
Let's unpack why.
Image source: Getty Images.
Growth is solid, but no longer flawless
For much of the past decade, The Trade Desk built a reputation for consistency. The company routinely outpaced expectations, delivering more than 30 straight quarters of revenue beats. That streak ended in late 2024, when The Trade Desk reported its first revenue miss in over eight years.
Management bounced back quickly. In the second quarter of 2025, revenue increased 19% year over year, indicating that the business remains resilient even in a challenging advertising market. However, the miss served as a reminder that no company -- not even The Trade Desk -- can execute flawlessly all the time.
To be clear, the company still posts enviable results. Retention remains well above 95%, and advertisers continue to increase their use of The Trade Desk's platform. Innovations like Kokai aim to make campaigns more effective by applying deep learning to impression scoring, bid optimization, and budget allocation. These advances could strengthen the company's value proposition.
Still, the flawless-execution narrative has cracked. Investors who once assumed near-perfect consistency now need to weigh the risks of future bumps.
Competition ramps up
The Trade Desk positions itself as the neutral platform for advertisers. That neutrality is valuable, but the advertising ecosystem is shifting fast, and rivals with scale are raising the stakes.
Amazon has become the most pressing threat. Its advertising revenue now exceeds $50 billion annually, fueled by retail media and streaming. The recent partnership with Netflix gives Amazon direct access to some of the most premium CTV inventory available. That's a tough blow for The Trade Desk, even though it is also a demand-side platform (DSP) partner of Netflix -- it means competition is intensifying.
Alphabet and Meta, meanwhile, continue to dominate the digital ad market with their vast audience data. By embedding artificial intelligence (AI) directly into their platforms, they sharpen their targeting capabilities and improve return on investment (ROI) for advertisers. These walled gardens already control enormous pools of user attention, and The Trade Desk must compete by offering transparency and cross-channel reach.
The opportunity outside the walled gardens remains large, particularly in CTV and retail media. But as competitors build their own advantages, The Trade Desk's challenge grows: maintain relevance and prove it can deliver unique value advertisers can't get elsewhere.
Its valuation leaves little cushion
Even after a pullback, The Trade Desk trades at steep multiples. The stock changes hands at approximately 60 times earnings and about 9 times sales (as of the time of writing). Those levels still assume strong growth and durable moats.
High multiples aren't a problem when a company consistently outperforms and expands its competitive lead. But with execution risk reemerging and competition intensifying, the stock leaves little room for error. Even if The Trade Desk grows steadily, investors buying at today's valuation could face modest returns if multiples compress.
In other words, the company doesn't just need to perform well -- it needs to perform exceptionally well for today's valuation to make sense.
What could change the picture?
Despite my caution, I remain bullish on The Trade Desk. A few developments could tilt the investment case more positively:
- Proven AI-driven results: Kokai has potential, but advertisers want clear evidence of ROI. If management demonstrates measurable improvements in campaign performance, it would strengthen the platform's value.
- A more attractive entry price: A lower valuation could restore an appealing risk-reward profile, especially if fundamentals remain strong.
What does it mean for investors?
The Trade Desk remains a business I admire. It delivers sticky customer relationships, strong profitability, and constant innovation. But admiration doesn't automatically translate into a buy recommendation.
With Amazon pushing harder into streaming ads, Google and Meta doubling down on AI, and the stock still priced at a premium, I see more risks than rewards at current levels.
For investors, the best move may be to keep The Trade Desk on the watchlist and wait for either a more attractive price or stronger evidence of competitive gains. Sometimes the hardest -- but smartest -- decision is to wait.
