We recently published a list of 11 Best AdTech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where ZoomInfo Technologies Inc. (NASDAQ:ZI) stands against the other best Adtech stocks to buy.
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.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
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.
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).
ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Holders: 37
ZoomInfo Technologies Inc. (NASDAQ:ZI) offers a go-to-market intelligence and engagement platform for sales and marketing teams. ZoomInfo rolled out its new AI-powered platform, ZoomInfo Copilot, which aims to offer more advanced and automated solutions for sales and marketing professionals.
ZoomInfo Technologies Inc. (NASDAQ:ZI)’s introduction of its AI-powered platform, ZoomInfo Copilot, demonstrates its strategic move to stay at the forefront of technological innovation in the B2B data and analytics space. With businesses seeking AI-driven solutions to enhance sales and marketing efforts, its investment in this area might place the company for future growth.
ZoomInfo Technologies Inc. (NASDAQ:ZI)’s early mover advantage in integrating AI into its core platform should create a competitive moat. Copilot surpassed $60 million of ACV (annual contract value) in the quarter, exceeding its expectations. Copilot’s adoption stems from the measurable return on investment it offers. ZoomInfo Technologies Inc. (NASDAQ:ZI)’s customers reported that 25% of their total pipeline is directly attributed to opportunities identified by Copilot. Also, there has been a 58% increase in prospect engagement rates and a 62% improvement in email response rates.
ZoomInfo Technologies Inc. (NASDAQ:ZI) has been experiencing double-digit growth in customer migrations to the Copilot tool. Wall Street expects increased adoption of ZoomInfo Copilot over the upcoming quarters due to features such as strategic account prioritization, expanded integrations (e.g., with HubSpot and Microsoft Dynamics 365), and actionable sales insights.
Baron Funds, an investment management firm, released its Q4 2023 investor letter. Here is what the fund said:
“We were too slow to sell when the probability of a likely thesis change dictated action over inaction. Each investment is like a puzzle. Different pieces are missing in different puzzles. Our process is deliberately slow and is built on collecting and analyzing as much information as possible and building conviction over time. In a highly stressful environment with a wide range of outcomes, a recognized lack of balance with emotions running high, postponing “bad decisions” is often the correct course of action except, when there is evidence of a potential or likely thesis change on the negative side in a bear market. We were often too slow and too timid in running for the exit. For example, when a company’s revenues prove to be less sticky during times of stress despite high average retention rates. ZoomInfo Technologies Inc. (NASDAQ:ZI), the business-to-business (B2B) sales data and software provider readily comes to mind, where we made a mistake selling the stock too slowly, as we did not fully appreciate the extent to which the company oversold unused licenses to its customers, which exacerbated the slowing demand environment, creating a whiplash effect as the license inventory was used up later on, causing revenue growth to decelerate materially.”
Overall, ZI ranks 3rd on our list of best AdTech stocks to buy according to hedge funds. While we acknowledge the potential of ZI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ZI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
