10 Best Ad-tech Stocks To Buy Now
In this piece, we will take a look at the ten best advertisement technology stocks to buy now. If you want to skip our introduction to the advertisement industry, then take a look at 5 Best Ad-tech Stocks To Buy Now.
Money makes the world go around, and most firms earn money by running advertisements. Advertisements inform consumers about a product, its features, and whether it can meet an existing need or requirement. Marketing campaigns are an integral part of new product launches, whether they are from the corporate titan Apple Inc. (NASDAQ:AAPL) or relatively smaller companies such as Nike, Inc. (NYSE:NKE). For consumer facing firms at least, making sure that customers have brand recognition and loyalty leads to steady revenue flow over the years.
However, the era of the Internet spurred by the growth in consumer technology has changed the landscape for advertisers. Running ads is quite an old industry that has grown in tune with information media. While campaigns of the late 1900s had to focus on newspapers and magazines, the Internet has changed the way in which firms attract consumers to their products. The technical nature of connectivity requires sifting through hundreds and thousands of people to pick out those that might be suitable for a campaign.
These campaigns are typically run by advertising companies, and the ecosystem for firms that play a role from the creation of an ad to its delivery to the end consumer is called advertising technology. Revenue from ads has helped one of the biggest search engines in the world, Alphabet Inc. (NASDAQ:GOOG). Alphabet derives more than half of its revenue from the business division termed 'Google Search', and this business generates money by providing placement for advertisements. According to Alphabet, Google Search generates revenue through performance and brand advertising.
In its 10-K, the firm outlines:
Performance advertising creates and delivers relevant ads that users will click on, leading to direct engagement with advertisers. Most of our performance advertisers pay us when a user engages in their ads. Performance advertising lets our advertisers connect with users while driving measurable results. Our ads tools allow performance advertisers to create simple text-based ads that appear on Google Search & other properties, YouTube and the properties of Google Network Members. In addition, Google Network Members use our platforms to display relevant ads on their properties, generating revenues when site visitors view or click on the ads. We continue to invest in our advertising programs and make significant upgrades.
Brand advertising helps enhance users' awareness of and affinity with advertisers' products and services, through videos, text, images, and other interactive ads that run across various devices. We help brand advertisers deliver digital videos and other types of ads to specific audiences for their brand-building marketing campaigns.
However, Alphabet's multi billion dollar business is just one part of the advertising technology ecosystem. To run ads, creators must make them and tailor them according to the needs of the customers. Meta Platforms, Inc. (NASDAQ:META) is another mega cap technology giant that plays a crucial role in this ecosystem. Its primary social media platform Facebook has a repository of the trends and preferences of millions of users, and Facebook can use it to inform advertisers about the right set of customers for their campaigns. Along this food chain are several other large players, such as Salesforce, Inc. (NYSE:CRM) and Adobe Inc. (NASDAQ:ADBE) that enable marketing teams to run targeted campaigns and create new content.
Safe to say, the ad tech market is quite sizeable and also one that is taking full advantage of recent trends in artificial intelligence. Shifting back to Alphabet, it has also started to integrate AI into Search, and a big reason behind the surge in the share price of Meta this year has been spurred by the potential of the firm to utilize its user data to run AI driven targeted campaigns.
Like any industry though, the ad tech industry is also vulnerable to economic uncertainty. The demand for ads reduced during the coronavirus pandemic as firms delayed their campaigns to resume activities when lockdowns were over and foot traffic and global air travel resumed. However, Google Search has been thriving for years now, since it has grown its revenue each calendar year since 2019. Alphabet's Google Search revenue has grown by roughly 60% since 2019, at a time when other firms often saw their net sales drop.
As to the future of Search, here's what Alphabet executives had to say during the firm's latest earnings call:
It’s worth reiterating that while generative AI is now supercharging new and existing ads products with tons of potential ahead, AI has been at the core of our ads business for years. In fact, today, nearly 80% of advertisers already use at least one AI-powered search ads product. Our approach to AI and ads remains grounded in understanding what drives real value for businesses right now and what’s most helpful for users.
Advertisers tell us they’re looking for more assistive experience to get set up with us faster. So at GML, we launched a new conversational experience in Google Ads powered by a LLM tuned specifically from ads data to make campaign construction easier than ever. Advertisers also tell us they want help creating high-quality ads that work in an instant. So, we’re rolling out a revamped asset creation flow in Performance Max that helps customers adapt and scale their most successful creative concepts in a few clicks. And there’s even more with PMax. We launched a new asset insights and new search term insights that improve campaign performance understanding and new customer life cycle goals that led advertisers optimize for new and existing customers while maximizing sales.
With these details in mind, let's take a look at some top ad tech stocks, out of which the notable ones are Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN).
Pixabay/ Public Domain
Our Methodology
To compile our list of the best ad tech stocks, we used our previous coverage and the holdings of the SmartETFs Advertising & Marketing Technology ETF to compile a list of 30 advertising technology companies. Then, the number of hedge funds that had invested in them as of Q2 2023 end was determined through Insider Monkey's database of 910 hedge funds and the top ten ad tech stocks are as follows.
10 Best Ad-tech Stocks To Buy Now
10. Baidu, Inc. (NASDAQ:BIDU)
Q2 2023 Hedge Fund Holdings: 36
Baidu, Inc. (NASDAQ:BIDU) is a Chinese technology company that runs a search engine and other applications that allow people to connect online. The firm's second quarter results were a breath of fresh air for the Chinese technology industry as Baidu, Inc. (NASDAQ:BIDU) managed to beat analyst estimates by a wide margin.
During Q2 2023, 36 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Baidu, Inc. (NASDAQ:BIDU). Out of these, the firm's largest shareholder is John W. Rogers' Ariel Investments since it owns 2.7 million shares that are worth $377 million.
Along with Alphabet Inc. (NASDAQ:GOOGL), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN), Baidu, Inc. (NASDAQ:BIDU) is a top ad tech stock that hedge funds are buying.
9. The Trade Desk, Inc. (NASDAQ:TTD)
Q2 2023 Hedge Fund Holdings: 37
The Trade Desk, Inc. (NASDAQ:TTD) is a pureplay ad tech firm that allows customers to run and manage their advertising campaigns. Its shares are rated Buy on average and the firm has beaten analyst EPS estimates in all four of its latest quarters.
As of June 2023, 37 out of the 910 hedge funds polled by Insider Monkey had bought the firm's shares. is The Trade Desk, Inc. (NASDAQ:TTD)'s biggest hedge fund investor through its $ stake.
8. Atlassian Corporation (NASDAQ:TEAM)
Q2 2023 Hedge Fund Holdings: 39
Atlassian Corporation (NASDAQ:TEAM) is a software company that develops products to enable teams to work with each other. Its revenue and business performance are tied to corporate budgets. Its CEO Scott Farqhuar is currently going against the tide when it comes to technology firms seeking reversal of work of home trends, as he recently shared that he has seen no effects on productivity from remote work.
By the end of this year's second quarter, 39 out of the 910 hedge funds profiled by Insider Monkey had invested in Atlassian Corporation (NASDAQ:TEAM).
7. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Q2 2023 Hedge Fund Holdings: 42
ZoomInfo Technologies Inc. (NASDAQ:ZI) provides a search platform that enables businesses to search for customers to target through advertisements. The firm's stock is down 41% year to date, as the shares tumbled by a whopping 27% at July end after its latest earnings report disappointed investors.
During 2023's June quarter, 42 out of the 910 hedge funds polled by Insider Monkey were ZoomInfo Technologies Inc. (NASDAQ:ZI)'s investors. The firm's biggest hedge fund investor is Mick Hellman's HMI Capital due to a $274 million stake.
6. HubSpot, Inc. (NYSE:HUBS)
Q2 2023 Hedge Fund Holdings: 57
HubSpot, Inc. (NYSE:HUBS) is a pureplay advertising technology firm that provides software for marketing and customer relationship management. The firm had a strong start to September as it introduced AI based upgrades to its platform which seek to enable customers to predict the outcomes of their strategic plans before putting them into action.
After digging through 910 hedge fund portfolios for their Q2 2023 shareholdings, Insider Monkey discovered that 57 had held a stake in the company. HubSpot, Inc. (NYSE:HUBS)'s largest shareholder out of these is Colin Moran's Abdiel Capital Advisors since it owns 1.1 million shares that are worth $604 million.
Meta Platforms, Inc. (NASDAQ:META), HubSpot, Inc. (NYSE:HUBS), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN) are some best ad tech stocks.
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Disclosure: None. 10 Best Ad-tech Stocks To Buy Now is originally published on Insider Monkey.
