Could This Be the Most Overlooked Way to Profit From the AI Boom?

Semiconductor and cloud computing companies dominate the discussion about artificial intelligence (AI) stocks, but there is an overlooked niche that is seeing strong AI-powered growth. That's niche is digital advertising.

Let's look at three stocks benefiting from this trend.

Image source: Getty Images.

1. AppLovin

The company that has benefited the most from AI in the digital advertising space is AppLovin (NASDAQ: APP). Since introducing its Axon-2 AI-powered adtech platform in 2023, the company has seen both its revenue and profitability growth explode. It also is seeing no signs of this growth letting up, with revenue surging 68% last quarter to $1.41 billion and EBITDA (earnings before interest, taxes, depreciation, and amortization) soaring 79% to $1.16 billion.

AppLovin has cracked the code in helping gaming apps attract new customers, which has been powering its growth. Between industry growth and continued improvements of its AI algorithm, it expects 20% to 30% revenue growth from the gaming sector over the long term. However, it also has other growth drivers.

The company just launched a new self-serve platform, which could attract smaller gaming advertisers. It's also expanded its platform outside the U.S., which is where most gamers reside. In addition, it's looking to move beyond gaming and into web-based advertising in areas like e-commerce. It also sees strong potential in AI-driven ad generation for this vertical, to help advertisers create better and longer ads that are best suited for its platform.

2. Meta Platforms

Another company seeing AI drive ad growth is Meta Platforms (NASDAQ: META), the owner of Facebook and Instagram. It's using AI to improve its recommendation engine, which is both attracting more users and keeping it on its apps longer. In addition, it's providing advertisers with AI tools so they can use generative AI to create better ad campaigns and improve targeting.

The result has been accelerating revenue growth for one of the largest digital platforms on the planet. In Q3, Meta saw its revenue jump 26% to $51.2 billion, which was an acceleration from its 22% revenue growth in Q2 and 16% growth in Q1. The Q3 growth was led by a 14% increase in ad impressions and a 10% rise in average ad prices.

Meanwhile, the company has a nice opportunity moving forward to better monetize its WhatsApp messaging app, which has over 3 billion users. While most of these users are international, and thus have lower ARPU (average revenue per user) potential, it just began serving ads on the platform, giving it a long runway of growth. It is also still building up the user base for its new Threads social media site, and is gradually introducing ads to the app. Between AI and these opportunities, Meta has a lot of growth still in front of it.

3. Pinterest

Like Meta, Pinterest (NYSE: PINS) has started using AI on both its front and back ends to help fuel growth. The company has created its own multimodal large language model (LLM) to power visual search and improve its recommendation engine. It's also using AI for features like virtual clothing try-ons, and it just introduced a voice-activated AI assistant that can act as a personal shopper. At the same time, its Performance+ AI-powered ad tool is helping advertisers not only create more effective campaigns, but is also assisting with bidding, conversions, and targeting, as well.

The company has experienced strong growth, with revenue climbing 17% last quarter and EBITDA rising by 24%. It's doing particularly well in international markets, with its European revenue jumping 41% and its rest-of-world revenue soaring 66% in Q3. Much of its user growth is also coming from these markets, and its total monthly active user base rose by 12% to 600 million.

Trading at a forward price-to-earnings (P/E) ratio of around 13.5 times 2026 analyst earnings estimates, the stock is cheap and has plenty of growth opportunities still in front of it.

Geoffrey Seiler has positions in Pinterest. The Motley Fool has positions in and recommends Meta Platforms and Pinterest. The Motley Fool has a disclosure policy.