TTD Stock Looks Cheap: Should Investors Hold or Exit Now?

The Trade Desk TTD, a prominent name in the digital ad tech space, is trading at a massive discount with the forward 12-month price-to-earnings (P/E) ratio of 10.29X compared with the Zacks Internet Services industry’s 24.21X. This is also below the Computer and Technology sector’s 22.51X and the S&P 500’s 20.64X.

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Even compared with major peers, Magnite Inc. MGNI and PubMatic PUBM, which trade at 10.78X and 22.07X, respectively, TTD remains discounted.

Given TTD’s prominent positioning in the demand-side platform (“DSP”) space, the valuation compression raises an important question — whether this is a temporary market correction or signals deterioration in its fundamentals and growth outlook.

Let’s examine closely to understand what TTD’s valuation compression represents for investors.

CTV & Other Tailwinds Offer Runway for Growth for TTD

Connected TV or CTV continues to be one of the company’s fastest-growing channels. In the fourth quarter of 2025, video, which includes CTV, comprised about half of the company’s business.

Increasing digital spending in CTV, particularly for premium content and live sports, is a key growth driver. The transition toward biddable CTV is gaining momentum. The benefits of decision-based buying (like greater flexibility, control and performance) compared with traditional programmatic guaranteed or insertion-order models are rendering it the logical choice for advertisers.

Beyond CTV, retail media has emerged as another fast-growing area in the digital advertising space and TTD is positioning itself to benefit from this trend. On the last earnings call, management noted that over the past five years, the company has formed partnerships with retailers around the world to build what it describes as the “largest and richest marketplace of retail data” globally. According to management, retailers participating in its data marketplace collectively represent more than half of retail sales worldwide.

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TTD has strengthened its relationships with major advertisers through Joint Business Plans (JBPs). By the end of 2025, JBPs accounted for more than 50% of the company’s business and the pipeline had more than doubled year over year.

Adoption of UID2 has been steadily increasing and this could prove to be a significant competitive advantage over time, particularly as the industry navigates evolving privacy standards. The company’s OpenPath, Deal Desk and OpenAds initiatives further strengthen its ecosystem by connecting advertisers directly to publishers, improving transparency and supply-chain efficiency.

TTD continues to expand globally, with international markets growing faster than North America. The company noted strong momentum across EMEA and APAC, reflecting multi-year investments in those regions. International business currently represents roughly 16% of total revenues, a clear opportunity for long-term growth.

AI & Kokai Platform

The Trade Desk’s increasing focus on artificial intelligence (“AI”) bodes well. Management views the combination of TTD’s proprietary AI capabilities and platform objectivity as a powerful competitive strength.

Kokai, TTD’s next-generation AI-powered DSP experience, remains central to its AI strategy. Nearly 100% clients now use Kokai as their default experience and this is strengthening its competitive moat. Citing a real-world example, TTD noted that IKEA reduced cost per acquisition by 17% using Kokai’s AI-driven omnichannel optimization.

Another important development is Audience Unlimited, which management described as one of its most significant innovations. Advertisers are wary of third-party data, citing high costs and uncertainty over effectiveness. Audience Unlimited tackles these issues by using AI to rank third-party data segments for campaign relevance, drawing from hundreds of trusted providers. Instead of costly a la carte pricing, advertisers gain access to all relevant data at a simplified, lower inclusive rate, enabling scalable precision targeting without unpredictable costs or reconciliation hassles.

Robust Liquidity Profile

Moreover, as digital advertising shifts toward AI-driven, outcome-based campaigns, The Trade Desk’s cash strength ($1.3 billion in cash, cash equivalents and short-term investments and no debt) offers a buffer against macro volatility.

Investors will also find the expansion of the buyback program to a total of $500 million appealing.

Challenges Persist for TTD

On the last earnings call, TTD highlighted soft demand in several important advertising verticals, particularly in consumer-packaged goods and Automotive. These categories represented some of the company’s weakest areas in the fourth quarter and remain soft entering 2026.

Though TTD is focusing on geographic expansion, executing well across disparate markets can be complex and risky. Regulatory and privacy-related changes like the deprecation of cookies and tightening data-privacy laws like Europe’s GDPR also pose ongoing challenges.

TTD is focused on embedding AI across the portfolio, which will further raise capex and operational costs. The company expects adjusted EBITDA margins in 2026 to remain roughly in line with 2025, as it continues investing in AI capabilities, product innovation and go-to-market infrastructure.

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Although TTD continues to grow, the growth rate has been slowing compared with previous years. While fourth-quarter revenues were up 14%, first-quarter revenues are expected to increase 10%.

Overall, the digital advertising spending is generally cyclical and prone to macroeconomic fluctuations. If macro headwinds worsen, revenue growth may face pressure due to reduced programmatic demand.

While The Trade Desk remains a leading independent DSP, the competitive environment is intensifying. Walled gardens like Meta Platforms, Apple, Alphabet and Amazon AMZN dominate this space as they control their inventory and first-party user data, allowing for highly targeted ad campaigns. Amazon’s expanding DSP business is giving tough competition to TTD, especially in this space.

While CTV remains a strong revenue driver, this market is also increasingly becoming competitive as smaller players like Magnite and PubMatic intensify their efforts.

TTD Stock Disappoints

TTD stock has been in the red for quite some time now. In the past three months, the share price has tanked 40.4%, while the losses for the past year stand at 50.9%. The industry is down 10.3% over the past three months, while one-year gains stand at 94%.

Price Performance

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In comparison, MGNI, PUBM and AMZN’s shares are down 26.7%, 0.7% and 13.6%, respectively, in the past three months.

TTD: Stay Invested?

Though TTD has several long-term catalysts, such as the rise of CTV, expanding retail media networks and the growing adoption of Kokai, the near-term picture remains muddled by macro uncertainty, rising expenses and intensifying competitive pressure from both walled gardens and independent ad-tech peers.

Given the balanced risk-reward profile, investors holding TTD stock can retain it in their portfolios for now, but new investors would be better off waiting for a favorable entry point.

At present, TTD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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