In this article, we will take a look at the 5 best advertising stocks to invest in. To see more such companies, go directly to 12 Best Advertising Stocks To Invest In.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 109
Adobe Inc. (NASDAQ:ADBE) ranks 5th in our list of the best advertising stocks to invest in according to hedge funds. Adobe Inc. (NASDAQ:ADBE) offers advertising Cloud platform.
A total of 109 hedge funds in Insider Monkey’s database had stakes in Adobe Inc. (NASDAQ:ADBE). The most significant stakeholder of Adobe Inc. (NASDAQ:ADBE) was Ken Griffin’s Citadel Investment Group which had a $657 million stake in the company.
Aristotle Large Cap Growth Strategy made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q3 2023 investor letter:
“Adobe Inc. (NASDAQ:ADBE) is one of the largest and most diversified software companies in the world. It has been known for brands such as Acrobat, Photoshop and Adobe Document Cloud. Adobe’s business is organized into three reportable segments: Digital Media, Digital Experience, and Publishing and Advertising. The Company’s products allow users to express and use information across all print and electronic media.
We see Adobe as a key enabler of digital transformation initiatives through the Digital Media and Digital Experience business segments. Adobe continues to innovate and integrate new capabilities across all its product suites. We see several products per customer continuing to increase, as Adobe users continue to use more products. We see this as a competitive advantage.”
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 122
Salesforce, Inc. (NYSE:CRM) has a Cloud and digital advertising platform. In the second quarter earnings call Salesforce, Inc. (NYSE:CRM) talked in detail about its marketing solutions platform, Cloud and AI:
“In the quarter, we saw add-on products like sales performance management, digital service, self-service and marketing engagement grow 40%. And to help our smaller business customers achieve faster time to value, we introduced a new product called Salesforce Starter in Q2, bringing sales, service and marketing into one integrated offering for our small business customers. As Marc said, Data Cloud is one of our fastest-growing organic innovations ever, and it lets customers unlock the power of their data to supercharge every application and customer experience with AI, automation and analytics. This is driving our strong momentum. Data Cloud was in five of our top 10 deals in the quarter, and we saw great wins at companies like SiriusXM and KPMG.
In the quarter, FedEx made a significant investment in Salesforce by adding Data Cloud, FedEx has long relied on multiple clouds from Salesforce, including sales, service, marketing and Einstein. Now with Data Cloud turned on, every part of Salesforce is deeply integrated to drive growth and deliver more targeted customer engagement and personalized experiences. We’re also seeing strong customer momentum on Einstein generative AI. PenFed is a great example of how AI plus Data plus CRM plus Trust is driving growth for our customers. PenFed is one of the largest credit unions in the US, growing at a rate of the next nine credit unions combined. They’re already using Financial Services Cloud, Experience Cloud and MuleSoft, and our Einstein-powered Chatbots handling 40,000 customer service sessions per month.”
Read the full earnings call transcript here.
Harding Loevner Global Equity Strategy made the following comment about Salesforce, Inc. (NYSE:CRM) in its Q2 2023 investor letter:
“Salesforce, Inc. (NYSE:CRM), a company we’ve owned since 2019, recently added ChatGPT-like capabilities onto its existing Al module, Einstein, to support its internal sales efforts and customer-facing software. For example, Einstein GPT can help generate marketing emails tailored to specific clients by using Salesforce’s customer database and past email correspondence to learn the most effective approach for each client. Einstein GPT is also different from off-the-shelf LLMS in three important ways: It keeps personal identifiable information private and secure, compared with external tools that retain anything a user enters. It employs the latest data in Salesforce’s system, as opposed to the sometimes-stale public data that train generic models. And generative Al capabilities can be integrated with other Salesforce offerings; the company has already introduced Slack GPT and Tableau GPT, Al-equipped versions of its workplace collaboration and analytics tools.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 225
Meta Platforms, Inc. (NASDAQ:META) is one of the top advertising stocks to invest in. Meta Platforms, Inc. (NASDAQ:META) is seeing rapid growth in ad spend from small businesses. During the second quarter, advertising accounted for a whopping 98.4% of Meta’s revenue as it grew to $31.5 billion.
Meta Platforms, Inc. (NASDAQ:META) is using AI to boost its ads revenue. Meta Platforms, Inc. (NASDAQ:META) talked about its AI-based advertising initiatives during its Q2 earnings call and said:
“Beyond Reels, AI is driving results across our monetization tools, through our automated ads products, which we call Meta Advantage. Almost all our advertisers are using at least one of our AI driven products. We’ve also deployed Meta Lattice, a new model architecture that learns to predict an ads performance across a variety of datasets and optimization goals. And we introduced AI Sandbox, a testing playground for generative AI powered tools like automatic text variation, background generation and image outcropping. Business messaging is another key piece of our monetization strategy and we recently announced that the 200 million users of our WhatsApp Business app will now be able to create Click-to-WhatsApp ads for Facebook and Instagram without needing a Facebook account.”
Read the full earnings call transcript here.
Aristotle Large Cap Growth Strategy made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META), formerly known as Facebook, is a global technology company specializing in social networking and the development of augmented and virtual reality technologies. Founded in 2004 and headquartered in Menlo Park, CA, the company has expanded its reach to nearly three billion monthly active users worldwide.
We see Meta as well-positioned to capture a significant share of the rapidly growing digital advertising market and has created an interconnected ecosystem of apps that drives higher user engagements. While leveraging AI and machine learning technology, Meta should see an acceleration in the development of targeted digital advertising capabilities and enhance the user experience across its platform. We see near-term catalysts in Rising Reels and Messenger revenue monetization and an expected robust 2024 political and Olympic advertising. Year-to-date, investors have been optimistic about the company’s pivot away from a focus on metaverse investments to an emphasis on profitability and growth in what the company calls its “Year of Efficiency.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) is becoming a digital ads giant by the day. In the second quarter alone Amazon.com, Inc. (NASDAQ:AMZN)’s ads business brought in a whopping $10.68 billion in sales, a 22% jump on a YoY basis. Amazon.com, Inc. (NASDAQ:AMZN) enjoys about 7.3% of the worldwide digital ad market, according to Insider Intelligence.
A total of 278 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in Amazon.com, Inc. (NASDAQ:AMZN). The most significant stakeholder of Amazon.com, Inc. (NASDAQ:AMZN) during this period was Oscar Hattink’s BlueDrive Global Investors which had an $8.4 million stake in the company.
White Falcon Capital Management made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2023 investor letter:
“There are comparable narratives involving NU Holdings, Amazon.com, Inc. (NASDAQ:AMZN), and Teck Resources, to name a few holdings from the White Falcon portfolio. Amazon constructed its logistics network and cloud computing infrastructure using yesterday’s currency, but it is poised to capitalize on this network with the inflated dollars of tomorrow. In essence, we believe we hold wonderful businesses with growing revenue streams and potential for operating leverage – all at reasonable valuations.”
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 204
Alphabet Inc. (NASDAQ:GOOGL)’s Google dominates the global search market. Wedbush’s analyst Dan Ives recently said that Alphabet and Meta Platforms are “well positioned” to benefit from the rise in digital advertising. Ives reiterated an Outperform rating on Alphabet Inc. (NASDAQ:GOOGL). The analyst expects the second half of 2023 could be “positive” for digital advertising.
Wedgewood Partners made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) was a top contributor to performance as search revenues accelerated during their second quarter. This improved performance flies in the face of fears that demand for the Company’s advertising inventory and core search functionality would be diluted by the Company’s own generative-AI offerings and outside substitutes. Alphabet subsidiaries have been at the vanguard of artificial intelligence for more than a decade. The Company has spent almost $150 billion on research and development over just the past five years, and today over 80% of the Company’s advertising customers use an AI-enabled tool when they run their Google Search and YouTube campaigns. Thus, Alphabet is certainly not “behind the curve” in any way, shape, or form when it comes to AI. Quite the contrary, the Company has ample room to rationalize spending to drive better returns on investments and increase capital returns to shareholders at these relatively attractive forward earnings multiples.”
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