We recently published a list of 15 Hot Tech Stocks to Buy Right Now. In this article, we are going to take a look at where The Trade Desk Inc. (NASDAQ:TTD) stands against other hot tech stocks to buy right now.
In 2024, the S&P 500 IT Sector Index outperformed the broader S&P 500 Index, rising approximately 36% compared to a 23% increase in the latter. This performance was underpinned by emerging trends and innovations, particularly generative AI (GenAI) and the huge investments that went into creating the infrastructure to support the growth of such technologies.
According to Gartner, the year 2025 might see a further uptick in investments. In its January 21, 2025 report, Gartner forecasts Worldwide IT spending to grow 9.8% year-over-year in 2025 to total $5.61 trillion. Among the segments, data center systems, devices, and software are projected to see double-digit growth in 2025 primarily due to GenAI hardware upgrades.
While increasing investment is a positive sign, John-David Lovelock, distinguished VP Analyst at Gartner, shared the complex intricacies of these investments in the report:
“While budgets for CIOs are increasing, a significant portion will merely offset price increases within their recurrent spending. This means that, in 2025, nominal spending versus real IT spending will be skewed, with price hikes absorbing some or all of budget growth. All major categories are reflecting higher-than-expected prices, prompting CIOs to defer and scale back their true budget expectations.
IT services companies and hyperscalers account for over 70% of spending in 2025. By 2028, hyperscalers will operate $1 trillion dollars’ worth of AI optimized servers, but not within their traditional business model or IaaS Market. Hyperscalers are pivoting to be part of the oligopoly AI model market.”
As indicated by these forecasts, technology continues to remain an exciting space in 2025.
Our Methodology
To shortlist the 15 hot tech stocks to buy, we screened companies with a market capitalization of at least $2 billion, more than 20% share price gains in the last 6 months and a potential upside of at least 20%. The stocks were then arranged in ascending order of their potential upside to arrive at the final list. We also included the number of hedge fund holders for each company based on hedge fund data from Insider Monkey’s database.
Note: all pricing data is as of market close on February 4.
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).
A large array of computer screens and tech equipment representing the technology company’s self-service cloud-based platform.
The Trade Desk Inc. (NASDAQ:TTD)
Upside Potential: 22%
Number of Hedge Funds: 42
The Trade Desk Inc. (NASDAQ:TTD) offers a self-service, cloud-based ad-buying platform for digital advertising, enabling customers to plan, manage, optimize, and measure data-driven digital marketing campaigns across various channels, including video, display, audio, digital-out-of-home, and social media. Its clients include advertising agencies, advertisers, and other service providers for agencies or advertisers. The company generates revenue by charging clients a platform fee based on a percentage of the client’s total spend on advertising, as well as through providing data and other value-added services and platform features.
The Trade Desk Inc. (NASDAQ:TTD) distinguishes itself with its technology and data analytics capabilities. Through its ‘Koa’ predictive algorithmic tools, the company utilizes artificial intelligence to process complex data sets and make recommendations for campaign optimizations, maximizing benefits for its clients. It is also well-positioned to capitalize on the shift toward digital advertising, which is anticipated to continue growing as brands increasingly redirect budgets away from traditional media. According to the company’s Q3 2024 investor presentation, management is targeting an addressable market of $900 billion in total global ad spending.
The investment management company, Rowan Street Capital, mentioned the following regarding The Trade Desk Inc. (NASDAQ:TTD) in their Q4 2024 investor letter:
“Looking ahead, TTD is expected to grow its revenues, earnings, and free cash flow at rates north of 20%. While the stock’s current valuation is lofty and reflects significant enthusiasm for the company’s long runway for growth, we believe its strong fundamentals will drive solid returns over time. Even if valuation multiples were to compress, which we expect they might, we still anticipate a solid return from our position—potentially doubling our investment over the next five years.”
Overall, TTD ranks 14th on our list of hot tech stocks to buy right now. While we acknowledge the potential of TTD to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TTD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
