In this article, we will discuss the 11 Best AdTech Stocks to Buy According to Hedge Funds.
As per Dimension Market Research, the Global AdTech market size touched US$1,066.8 billion in 2023 and should reach US$3,528.4 billion by 2032. The market is expected to compound at ~14.2% from 2024 to 2032. Some of the critical trends include a strong emphasis on privacy-centric advertising, growth fueled by AI-driven personalization, and dominance of video and mobile advertising.
Key Trends Defining the AdTech Market
Artificial Intelligence and Machine Learning continue to drive sophisticated audience segmentation and personalized ad experiences. As per Geomotiv, a software development company, these technologies can quickly analyze vast amounts of data, predict user behavior, and tailor ads in real time. Collectively, these features help to improve engagement and conversion rates. The benefits of personalization and the opportunities provided should drive the demand for these solutions and the growth of AI-oriented AdTech companies.
Market experts believe that advertisers continue to target Programmatic advertising. This space continues to expand beyond traditional digital channels. Adnimation, a software company, highlighted that CTV ad spending is expected to grow to $42.4 billion by 2027 in the US. Publishers that have video content should prioritize CTV and find for best supply-side platform (SSP) to tap into a rapidly growing market.
Advertisers have been leveraging programmatic to reach the audiences with targeted ads. Furthermore, programmatic continues to make inroads into the audio format, such as podcasts and music streaming services. Next, AdTech SaaS companies have been providing customizable solutions, which enable advertisers to tailor the tools and features as per the specific needs. The popularity of these products continues to grow among advertisers and publishers.
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Blockchain and Influencer Marketing Should Drive Growth
As per Adnimation, data-driven influencer marketing is expected to dominate the broader AdTech market. Furthermore, the publishers and their AdTech counterparts continue collaborating with micro-influencers to fuel engagement and conversions. Blockchain technology should also be key in ensuring transparency in digital ad transactions. By decentralizing ad transactions, blockchain can help reduce ad fraud, improve trust between publishers and advertisers, and enable accurate tracking of ad performance. This will result in more reliable revenue streams. Adnimation also believes that, by 2025, video is expected to dominate digital ad formats, making up 82% of all internet traffic.
Let’s now have a look at the 11 Best AdTech Stocks to Buy According to Hedge Funds
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Our Methodology
To list the 11 Best AdTech Stocks to Buy According to Hedge Funds, we scanned through online rankings and AdTech-focused ETFs. After getting the initial list of 20-25 stocks, we shortlisted the ones having high hedge fund holdings. Finally, the shortlisted stocks were arranged in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Best AdTech Stocks to Buy According to Hedge Funds
11) Nexxen International Ltd. (NASDAQ:NEXN)
Number of Hedge Fund Holders: 5
Nexxen International Ltd. (NASDAQ:NEXN) offers an end-to-end software platform that enables advertisers to reach publishers. A significant strategic move for Nexxen International Ltd. (NASDAQ:NEXN) was the integration of Amobee, which enhanced its programmatic demand capabilities. The successful integration enabled the company’s management to pivot focus towards offensive strategies targeted at expanding adjusted EBITDA and driving CTV growth. As per the industry experts, this integration, together with improved go-to-market strategies, should result in revenue acceleration over the upcoming months.
Next, the Nexxen International Ltd. (NASDAQ:NEXN)’s Data Platform should continue acting as a key market differentiator. It secured critical partnerships, such as collaboration with United Airlines’ commerce media network and a data licensing agreement with The Trade Desk. Analysts opine that these partnerships validate Nexxen International Ltd. (NASDAQ:NEXN)’s unique data assets, which include exclusive Automatic Content Recognition (ACR) data from VIDAA and streaming data from PeerLogix.
The company’s exclusive access to VIDAA ACR data and PeerLogix streaming data offers it a significant competitive advantage in digital advertising. These unique data assets allow Nexxen International Ltd. (NASDAQ:NEXN) to provide more targeted and effective advertising solutions, mainly in the rapidly growing CTV segment. With advertisers seeking data-driven approaches, the company’s proprietary data can fuel its long-term sustainable growth.
10) Outbrain Inc. (NASDAQ:OB)
Number of Hedge Fund Holders: 9
Outbrain Inc. (NASDAQ:OB) operates a technology platform that connects media owners and advertisers with engaged audiences in a bid to drive business outcomes.
Wall Street analysts believe that Outbrain Inc. (NASDAQ:OB)’s position as a top 3 open web advertising platform cements its competitive strength in the crowded market. Its exclusive contracts with publishers offer a defensible business model, and product catalysts like Keystone and Onyx provide strong visibility for further market penetration. The company’s focus on product innovation, mainly with offerings such as Predictive Demographics and the expansion of Onyx, should place it for potential significant growth.
Predictive Demographics might offer advertisers more precise targeting capabilities, which should increase the effectiveness of ad campaigns and the value of Outbrain Inc. (NASDAQ:OB)’s platform to advertisers. Apart from innovative product offerings, the company’s growth trajectory should be aided by the Teads acquisition, which is expected to close in Q1 2025.
This acquisition can accelerate Outbrain Inc. (NASDAQ:OB)’s relationships with agencies, offer a broader client base, and potentially increase the share of advertising budgets. Also, the integration of Teads’ high-quality brand advertisers with the company’s core recommendation product should improve the overall perception of Outbrain Inc. (NASDAQ:OB)’s offerings. The acquisition is also expected to increase Outbrain Inc. (NASDAQ:OB)’s data assets. As per Wall Street, the shares of the company have an average price target of $6.10.
