TTD vs. PUBM: Which Ad-Tech Stock Is the Smarter Pick Now?

Digital advertising remains one of the most attractive long-term growth markets in the technology space. According to a Precedence Research report, the global digital advertising market is expected to witness a CAGR of 9.4% from 2026 to 2035.

Both The Trade Desk TTD and PubMatic PUBM play pivotal roles in the programmatic advertising ecosystem, but at opposite ends of the spectrum. TTD operates a leading demand-side platform (“DSP”), which helps advertisers focus on data-driven ads. PubMatic, on the other hand, is a sell-side platform that helps publishers across the open internet to control access to their inventory and boost monetization.

Both firms have sizeable exposure to the booming connected TV (“CTV”) and retail media trends. Despite their shared tailwinds, The Trade Desk and PubMatic represent very different investment profiles.

Understanding the strengths, weaknesses and risk-reward dynamics of each is essential for determining which stock may be the better pick right now.

TTD Faces Several Challenges

Macro-driven caution around advertising budgets remains a significant concern for a pure-play ad tech company like The Trade Desk.

The Trade Desk is facing intense competition in the digital ad space. Walled gardens like Meta Platforms, Apple, Google and Amazon dominate this space as they control their inventory and first-party user data, allowing for highly targeted ad campaigns. While CTV remains a strong revenue driver, the market is also becoming increasingly competitive. AMZN’s expanding DSP business is giving tough competition to TTD, especially in this space.

TTD is focused on embedding AI across the portfolio, which will increase capex and operational costs. Rising expenses, coupled with investments, could compress margins if revenue growth slows. In the last reported quarter, total operating costs (excluding stock-based compensation) surged 17% year over year to $457 million. Expenses increased due to continued investments in enhancing platform capabilities, particularly in platform operations.

The Trade Desk Price, Consensus and EPS Surprise

The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote

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.

Despite these factors, TTD has several tailwinds that continue to support its long-term narrative. Shift toward open Internet remains the key theme. Management noted that the transition toward biddable CTV is gaining rapid momentum, and it expects decision CTV to become the default buying model in the future. 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. Kokai, TTD’s next-generation AI-powered DSP experience, remains central to its strategy. 85% clients use Kokai as their default experience and this is strengthening its competitive moat.

TTD is scheduled to report fourth-quarter 2025 earnings on Feb. 25. The company expects revenues to be at least $840 million. Excluding the benefit of U.S. political ad spend in the prior-year quarter, the revenue growth rate is projected to be 18.5% year over year. It projects $375 million in adjusted EBITDA.

PUBM: Strengthening Momentum

Like TTD, CTV remains PubMatic’s central pillar of its growth. Revenues from CTV increased more than 50% year over year in the third quarter (excluding political ads). The company monetized inventory from more than 90% of the top 30 global streamers in the third quarter. Management believes the ongoing shift of approximately $155 billion in linear television ad spend to digital formats provides a multi-year runway for sustained CTV growth.

Overall, Omnichannel video revenues increased 21% year over year, driven by premium video portfolio and uptake of AI-powered optimization. From less than 30% two years ago, CTV, mobile app and emerging revenue streams now contribute more than 40% of total revenues.

PubMatic is heavily investing in emerging revenue streams (Activate, sell-side data targeting and commerce media) to drive growth and create sticky customer engagement. Revenues grew more than 80% year over year and accounted for 10% of total revenues in the third quarter. Revenues from Activate doubled while the curation and data business connect was up 40%.

PubMatic, Inc. Price, Consensus and EPS Surprise

PubMatic, Inc. price-consensus-eps-surprise-chart | PubMatic, Inc. Quote

The company’s AI-first, three-layer strategy spanning infrastructure, application and transaction is designed to increase platform usage, generate new revenue streams and boost operational efficiency. Earlier this month, the company launched AI Insights. It is a set of AI-driven capabilities that will enable publishers to comprehend demand dynamics to make better decisions to enhance their revenue streams.

PUBM is slated to report fourth-quarter and 2025 results on Feb. 26. Fourth-quarter revenues are projected in the range of $73 million to $77 million and adjusted EBITDA between $19 million and $21 million. It anticipates double-digit CTV growth (excluding political advertising) and more than 30% growth in emerging revenues.

However, risks remain tied to DSP concentration. One of PubMatic’s major DSP clients revised the bidding approach in July, affecting its top line. For the fourth quarter, management expects revenues from this DSP to remain flat sequentially. Intense competition and macro troubles remain a concern for PUBM, too.

Share Performance & Valuation for TTD & PUBM

Over the past month, TTD and PUBM’s shares have lost 25.8% and 14.7%, respectively.

In terms of the forward 12-month price/sales ratio, TTD’s shares are trading at 3.55X, higher than PUBM’s 1.09X.

How Do Zacks Estimates Compare for TTD & PUBM?

Analysts have kept their estimates unchanged for TTD’s bottom line for the current year in the past 60 days.     

For PUBM, the estimates are unchanged for the current fiscal year.

TTD or MGNI: Which Is a Smarter Pick?

TTD currently carries a Zacks Rank #4 (Sell), while PUBM has a Zacks Rank #3 (Hold).

In terms of Zacks Rank, PUBM is a better pick at the moment.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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This article originally published on Zacks Investment Research (zacks.com).

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