TTD and UPST: AI-Driven Growth Stocks Poised for Long-Term Gains

The AI revolution is reshaping industries, and two companies—The Trade Desk (TTD) and Upstart (UPST)—are leveraging cutting-edge technology to dominate their markets. Despite recent stock price declines, these AI-powered platforms offer compelling value propositions for investors seeking long-term growth. Let's dissect their competitive advantages, valuation metrics, and risks to determine if now is the time to buy.

The Trade Desk: AI-Powered Advertising Dominance

The Trade Desk, a leader in programmatic advertising, has built its moat through its AI-driven platform, Kokai, which optimizes ad placements in real time across digital channels, including connected TV (CTV). This technology reduces ad waste and improves ROI for advertisers, making it indispensable in an era where digital ad spending is projected to grow at 14% annually through 2030.

Key Strengths:

• CTV Leadership: TTD's share of the CTV ad market is unmatched, benefiting from partnerships with retailers like Walmart and Albertsons.
• AI Innovation: Kokai's machine learning capabilities enable hyper-targeted campaigns, outperforming traditional ad tech.
• Consistent Growth: Analysts project 12% annual earnings growth through 2026, despite revenue growth slowing to 250 basis points below consensus in 2025.

Valuation: A Buying Opportunity?

As of June 2025, TTD trades at a P/E of 31 and a P/S of 13.7, down sharply from its 2022 peak of 4.0x sales. While this P/S remains above the industry median (2.28), it's now 37% below its 3-year average, suggesting a valuation reset.

Analysts see upside: The consensus 12-month price target of $132.15 (vs. a current price of $71) implies a 85% potential gain. Notable upgrades include Susquehanna's $135 target, citing TTD's AI-driven edge and CTV dominance.

Risks to Consider:

• Growth Compression: TTD's revenue growth is expected to slow, and its P/E multiple has already declined from 40x to 16x since 2022.
• Ad Tech Competition: Rival platforms like AppLovin and PubMatic could erode margins if TTD's innovation lags.

Upstart: AI-Driven Lending with Network Effects

Upstart is revolutionizing fintech by using AI to assess credit risk, enabling banks to offer loans at lower rates while reducing defaults. Its platform's predictive accuracy improves with every transaction, creating a self-reinforcing network effect. This model has driven loan volumes up 89.5% YoY as of Q4 2024.

Key Strengths:

• AI-Driven Efficiency: Upstart's algorithms reduce credit risk, attracting both lenders and borrowers.
• Strategic Partnerships: Collaborations with financial institutions expand its reach, accelerating adoption in a $1.5T digital lending market.
• Resilience: Even in rising-rate environments, its Q2 2025 revenue is projected to grow 76.8% YoY, underscoring scalability.

Valuation: Undervalued or Overhyped?

Upstart's P/S of 6.53 (down from 8.3 in late 2024) is still 100% higher than its industry median, but its trailing P/E of 165 reflects aggressive growth expectations (195% annual earnings growth through 2026).

Analysts are cautiously optimistic: The average price target of $69.46 (vs. $54.33) suggests 28% upside, with Mizuho's $85 target highlighting its long-term potential.

Risks to Consider:

• Regulatory Scrutiny: AI lending models may face stricter oversight, complicating growth.
• Interest Rate Sensitivity: Higher rates could reduce loan demand and margins.

Comparing TTD and UPST: Which Offers Better Value?

Metric	The Trade Desk (TTD)	Upstart (UPST)
Current Price	$71	$54.33
Avg. Analyst Target	$132.15 (+86%)	$69.46 (+28%)
P/S Ratio	13.7	6.53
Growth Catalyst	CTV & AI ad tech	AI lending network
Risk Priority	Margins, competition	Regulation, rates

Both stocks offer compelling upside, but TTD's higher analyst targets and robust ad tech tailwinds make it the stronger buy here. While Upstart's AI network is powerful, its valuation sensitivity and macroeconomic risks demand a more cautious approach.

Investment Thesis: Buy the Dip, Hold for the Long Run

The Trade Desk is the clearer buy now. Its AI platform and CTV leadership position it to capitalize on secular growth in digital advertising. Even with near-term growth headwinds, the 86% upside to consensus targets justifies a strategic long position.

Upstart, while undervalued relative to its growth trajectory, faces greater execution risks. Investors should wait for clarity on interest rate trends or regulatory outcomes before entering.

Key Takeaways:

• TTD: Buy at $71 for $132.15 target; hold for 1–2 years.
• UPST: Consider a gradual accumulation below $50, but prioritize TTD first.

Final Verdict: AI's Future is Now—Invest Wisely

Both companies are pioneers in their fields, but valuation and risk profiles matter. TTD's discounted P/S and analyst optimism make it a standout opportunity. Upstart's potential is undeniable, but its risks warrant a wait-and-see stance. For investors with a long-term horizon, TTD offers the best blend of growth, AI dominance, and valuation upside.

Investment recommendation: Allocate 20% of a growth portfolio to TTD at current levels, with a stop-loss at $60. For UPST, wait for a pullback to the $40s before adding exposure.

Data as of June 6, 2025. Past performance does not guarantee future results.